South Korea’s favourite AI stocks slide again, drag Kospi index down 8%

Kospi, the benchmark index for the South Korean stock market, tumbled again on Friday after a week of volatility, as AI chip stocks that had made the index one of the world's best-performing markets this year dragged it down.

Heavyweights Samsung Electronics and SK Hynix, which together account for more than half of Kospi's market cap, fell around 9% each on Friday, forcing the exchange to trigger circuit breakers and halt trading for roughly 20 minutes. This came after an eventful week for the index, which had already plunged nearly 10% on Tuesday, before rebounding 3.26% on Wednesday as investors returned to semicon stocks, according to reports.

Credit: Google Finance


Fragile rally

These swings follow an extraordinary run. The Kospi is up roughly 95% year-to-date, almost entirely on the strength of the two chipmaker stocks.

SK Hynix shares are up about 250% since the start of the year due to surging demand for its high-bandwidth memory chips used in AI servers, while Samsung's stock has gained around 149%.

The rise in demand for their chips has taken both companies past the $1 trillion market-value in the last few weeks, making South Korea home to two of the world's roughly one dozen trillion-dollar listed firms.

SK Hynix had also briefly overtaken Samsung as Korea's most valuable company on June 22, the first such shift in 26 years, before this week's selloff.

Also Read: South Korea overtakes India as world’s sixth-largest stock market

Credit: Google Finance

Two troubling

The dependence of the index on merely two stocks is the problem. Samsung and SK Hynix comprise such an outsized share of the index that the same rally that delivered record gains now exposes Kospi to any wobble in these two stocks.

This rout is part of a broader global retreat in tech stocks as investors grow uneasy about the scale of AI capex by Big Tech firms, who are collectively planning to spend over $700 billion on AI infrastructure in 2026.

ET reported earlier in June that India's benchmarks are isolated from these shocks as its indices are more broad-based without such a heavy skew towards a couple of stocks.