KOSPI Extends Two-Day Rout As AI-Linked Selloff Deepens After SK Hynix Results

South Korea’s equity market remained under intense pressure on July 29, with the benchmark KOSPI index falling 10% and triggering a trading suspension for the second straight session. The decline followed a weak investor response to SK Hynix’s quarterly earnings, adding to concerns over valuations and investment spending linked to artificial intelligence (AI).

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The sharp decline pushed the KOSPI below the 6,000 level, its lowest point since early April. After dropping 11% in the previous session, the benchmark has now fallen more than 21% over two trading days. The latest slide also places the index around 40% below its recent peak, reflecting a rapid reversal after a strong rally earlier this year led by semiconductor stocks.

SK Hynix Share Price Weighs On Broader Market

While the earnings were up by an impressive 557%, the performance of SK Hynix shares fell below expectations, leading to a sharp fall of almost 15%.

Samsung Electronics faced the same pressure due to anticipation of its quarterly results, which led to a decrease in the price level by about 8%. The decline in the two dominant players in the industry contributed greatly to the overall decline in the index since they form a significant portion of the index weightage.

AI Investment Concerns Continue To Influence Markets

The latest decline reflects growing investor caution around companies tied to the AI investment cycle. Market participants have increasingly questioned whether large capital commitments across the semiconductor industry can continue delivering returns that justify current valuations.

The selling pressure extended beyond large-cap technology companies. The KOSDAQ Index, which tracks small and mid-sized companies, declined more than 8%, triggering a separate 20-minute trading halt during the session.

The greater vulnerability occurs after a long spell of gains fueled by expectations of demand for AI applications. But earnings responses over the last few weeks have brought to the fore concerns of execution and profitability, causing wide-scale selling of semiconductor stocks.

Higher Crude Price Adds To Investor Caution

Investor sentiment was also affected by rising crude price after renewed geopolitical tensions in the Middle East. Brent crude price climbed more than 4% to trade above $88 per barrel after the United States said it had intercepted an Iranian attack targeting its forces and launched retaliatory strikes against Iran.

The combination of geopolitical uncertainty and continued pressure on semiconductor stocks contributed to another volatile trading session across South Korean equities. According to available market data, nine of the 15 circuit breakers recorded by the KOSPI since 2000 have occurred during this year, underscoring the elevated volatility seen in the market.