South Korean Shares Plunge on AI Concerns

The benchmark KOSPI plunged 3.73% to close at 5,553 on Tuesday, reversing gains from the previous session, as renewed selling in semiconductor stocks reflected persistent concerns over the sustainability of AI investment. Samsung Electronics and SK hynix slid 3.21% and 4.70%, respectively, as worries over debt-funded AI infrastructure and elevated borrowing costs continued to cloud the sector's outlook. Other notable declines included SK Square (-5.13%), LG Energy Solution (-4.40%), Hyundai Motor (-5.29%), Hanwha Aerospace (-11.71%), Doosan Enerbility (-5.71%), HD Hyundai Heavy Industries (-8.83%), and Kia Corporation (-3.45%). Meanwhile, South Korea's planned 800 trillion won investment in four semiconductor fabs and SK hynix's 2 trillion won supplier financing program aim to expand domestic chipmaking capacity and strengthen the semiconductor supply chain, although infrastructure and US trade-related hurdles remain.

The benchmark KOSPI rose 1.76% to close at 5,768 on Monday, extending gains from the previous session amid institutional buying and bargain hunting in large-cap stocks. Institutions bought a net KRW 574.66 billion worth of shares, offsetting part of the selling by foreign investors and retail traders. Samsung Electronics climbed 1.16%, while SK hynix rose modestly by 0.16%. Other notable gainers included LG Energy Solution (6.70%), Hyundai Motor (4.33%), Samsung Biologics (8.71%), Hanwha Aerospace (1.69%), Kia Corporation (4.90%), KB Financial Group (1.75%), and Doosan Enerbility (2.79%). Meanwhile, concerns over AI valuations and the sustainability of infrastructure spending persisted ahead of major US technology earnings reports this week, with Chinese competition in memory chips adding to concerns over the sector's outlook. Additionally, Middle East tensions and attacks on commercial vessels in the Persian Gulf kept oil-supply disruption risks in focus.

The benchmark KOSPI edged down to around 5,660 on Monday, reversing gains from the previous session, as AI investment concerns weighed on semiconductor stocks amid a US tech sell-off. Samsung Electronics slipped more than 2%, while other notable decliners included SK Square (-2.6%), Samsung Electro-Mechanics (-4.7%), Doosan Enerbility (-1.2%), Shinhan Financial Group (-1.4%), HD Hyundai Heavy Industries (-4.0%), Hana Financial Group (-1.1%), and SK Inc (-2.4%). DeepSeek’s latest AI model revived concerns that more efficient models could require less memory, while growing competition from Chinese chipmakers added to worries over Samsung Electronics and SK hynix. Foreign investors’ heavy net selling of Korean equities last week further highlighted the pressure on the market. Separately, escalating Middle East tensions and attacks on commercial vessels in the Persian Gulf kept oil-supply disruption risks in focus, although oil prices eased early Monday.