South Korean chip stocks plummeted, pushing the equity benchmark below a key milestone, as fears deepened over how the Democrat sweep of Congress could slow the artificial intelligence buildout.
Samsung Electronics Co. and SK Hynix Inc. plunged more than 11% each in early Friday trading before paring losses. The benchmark Kospi fell as much as 8.8%, prompting the Korea exchange to halt trading for 20 minutes shortly after the open. That followed a global rout Thursday that drove the Nasdaq 100 down 6.4%, wiping out a record $2.3 trillion in market value.
The selloff pulled the Kospi below the 5,000 level target set by President Lee Jae Myung in 2025. That goal was surpassed earlier this year as Korean chip giants rode the AI boom, pushing the benchmark above a record 9,000 in the summer and cementing Korea’s status as the world’s hottest market. The subsequent unraveling of the global AI trade hit the country the hardest given its reliance on the two chip stocks.
“In the end, we have reached the panic sell stage,” said Kim Dojoon, chief executive officer at Zian Investment Management. “Most market participants would be forced to sell in today’s market”.
Investors rushed to exit the AI trade this week following US midterm elections, on expectations that tighter regulations in AI may constrain the growth of chipmakers and data-center suppliers. A closely-watched gauge of US semiconductor stocks plunged 12% Thursday to notch its worst day since the onset of the Covid-19 pandemic in March 2020.