Kospi Plummets Over 16% Amid Tech Slowdown, Triggering Trading Halts and Investor Caution

Kospi Plummets Over 16% Amid Tech Slowdown, Triggering Trading Halts and Investor Caution​

South Korea's benchmark Kospi index experienced a sharp downturn this week, extending steep losses that culminated in a trading halt on Friday. The market turmoil was driven by heavy selling pressure within the technology sector amid rapidly weakening sentiment surrounding artificial intelligence (AI) stocks. The Korea Exchange intervened with a 20-minute trading halt after the index fell sharply.

Market Turmoil and Index Performance​

The Kospi later saw significant corrections, dropping as much as 9 percent before moderating its losses. The index was last recorded trading approximately 5.8 percent lower after dipping to an intraday low of 8,126.84. This collapse marks a critical trend for the market; earlier this week on June 23, the Kospi had already plunged 10 percent, and it has now fallen over 16 percent during the entire week.

Weakening AI Sentiment in Chip Stocks​

A major contributing factor to the decline was the deteriorating sentiment around key technology players. Shares of both Samsung Electronics and SK Hynix fell by more than 10 percent at one point in trading. Foreign investors reportedly sold shares valued at approximately 5 trillion won, which is equivalent to nearly Rs 3.1 lakh crore.

These two chipmakers hold a combined weightage of nearly 60 percent within the Kospi, meaning their sharp declines exert an immense pressure on the benchmark index. As leaders in the global semiconductor supply chain, weakness in these stocks negatively affects investor sentiment not only across Asian markets but also globally.

Chip Price Hikes and Global Consumer Electronics Headwinds​

Investor concerns intensified as market sentiment took stock of Apple's recent price adjustments for its iPads and MacBooks. This move followed the increase in memory chip costs encountered by the company. While Apple shares fell 6.1 percent overnight, wiping out about $250 billion in market value, Microsoft also increased prices on its Xbox gaming consoles globally by as much as $150.

This pricing power shift occurred despite strong performance from Micron Technology, whose shares rose nearly 16 percent to a record high. Investors viewed Apple's price hikes not merely as a cost transfer, but as an indicator that rising chip costs could eventually harm demand for consumer electronics. Charu Chanana of Saxo cautioned that "Big tech may at some point start to feel the pain of these higher component costs," warning it could become a broader ecosystem headwind.

OpenAI IPO Delay Concerns Hit Investor Confidence​

Investor morale was further dampened by reports suggesting that OpenAI might delay its initial public offering (IPO). A report from The New York Times indicated that OpenAI is considering postponing its stock market debut until next year. Reuters had previously reported that the company, which has confidentially filed for a US IPO, is targeting a valuation of up to $1 trillion.

In response to these developments, Homin Lee, a strategist at Lombard Odier in Singapore, stated that the movements are likely due to rumored IPO delays in the US, alongside Apple's price hikes. The collective impact of high input costs and rising funding demands is causing investors to become increasingly selective regarding AI exposure within global markets.