Korean Stocks Slide Amid AI Bubble Concerns

The benchmark KOSPI jumped 3.55% to close at 8,476 on Friday, reaching fresh record highs after briefly retreating as investor appetite improved on easing geopolitical tensions in the Middle East. Optimism grew after reports said the United States and Iran agreed to extend their ceasefire framework and resume talks on Tehran’s nuclear program. Support also came from Wall Street, where major US indexes closed at record highs overnight, led by gains in the S&P 500 and Nasdaq. Gains in Seoul were driven largely by technology and automobile stocks, with heavyweight shares such as Samsung Electronics (+5.84%), SK Hynix (+1.92%), Hyundai Motor (+6.79%), and Kia Corp (+2.98%) advancing strongly. Separately, Investors also monitored fresh economic data, as South Korea’s industrial production unexpectedly fell 0.7% in April while retail sales slumped 3.6%, marking the steepest decline since July 2020.

The benchmark KOSPI fell 0.53% to close at 8,185 on Thursday, pulling back from record highs amid uncertainty surrounding US-Iran negotiations. Sentiment weakened after US President Donald Trump said Washington was still “not satisfied” with ongoing talks, while the White House denied reports suggesting progress on reopening the Strait of Hormuz. Brent crude climbed back toward $96 per barrel, weighing on risk appetite. Technology shares retreated after leading recent gains, with Samsung Electronics (-2.28%) moving lower alongside SK Square (-2.82%), HD Hyundai Heavy Industries (-5.38%), and Hanwha Aerospace (-3.14%). Meanwhile, broader sentiment remained supported by optimism over South Korea’s semiconductor sector after the Bank of Korea raised its 2026 growth forecast to 2.6% from 2.0%, citing robust chip-driven exports. The central bank also kept interest rates unchanged for an eighth straight meeting while highlighting persistent inflation and currency risks.

The benchmark KOSPI climbed 2.25% to close at 8,229 on Wednesday, hitting a fresh record high as a global AI-driven semiconductor rally boosted investor appetite for Korean technology shares. Strong overnight gains on Wall Street fueled heavy buying in Samsung Electronics (3.34%) and SK hynix (10.04%), with SK hynix joining rivals Samsung Electronics and Micron Technology in the $1 trillion market capitalization club. Other notable gainers included SK Square (8.81%), Hyundai Mobis (4.52%), SK Inc. (4.12%), and Alteogen (5.88%). Additional support came from improving business sentiment, which climbed to its highest level in more than three years, alongside optimism over South Korea’s semiconductor-driven economic outlook. Meanwhile, investors continued to monitor developments in the Middle East as renewed US military action against Iran tempered optimism surrounding ongoing ceasefire and peace negotiations, keeping concerns over energy prices and inflation risks in focus.