South Korea’s Kospi index plummeted by over 7% on Thursday, as worries over further U.S. Federal Reserve interest rate hikes triggered a broad sell-off in Asian technology stocks. The decline follows a drop in U.S. markets driven by inflation figures that exceeded expectations, raising apprehensions among investors.
Semiconductor manufacturers in South Korea faced significant losses, with SK Hynix falling more than 10% and Samsung Electronics sliding 8%. Other related stocks, including LG Innotek, Seoul Semiconductor, and Samsung SDI, recorded steep declines ranging from nearly 7% to over 9%.
Investor sentiment took a hit amid mounting concerns that elevated borrowing costs could jeopardize the substantial capital expenditures needed for artificial intelligence infrastructure. This unease was amplified following recent remarks from technology sector leaders, including top executives at Broadcom and Intel, who noted that securing funding may become a significant challenge for ongoing AI development efforts.
Analysts noted that the uplift in U.S. Treasury yields, now exceeding 5%, is drawing investor focus toward the financial health of firms investing in AI, although actual demand for computing power has not diminished. Some suggested the present pullback could represent a potential entry point for investors, stressing that a shift in demand would be the key indicator for a change in outlook.
In response to the rapid decline, South Korea’s market operator instituted a “sidecar” trading suspension after the Kospi index’s futures experienced sharp losses. This five-minute halt on program sell orders was triggered during what became the market’s longest losing streak since September 2024—a seven-session streak of declines.
A strategist at JPMorgan in Hong Kong, Mixo Das, observed that buying momentum in key names such as Samsung and SK Hynix had faded, and predicted that while near-term volatility is likely, valuations for AI-exposed stocks are expected to recover over the coming six to twelve months.
