Key facts
- South Korea's Kospi index closed down 9.99% on Tuesday.
- The decline was the largest since March 4.
- The sell-off was driven by a global tech sell-off, particularly in AI-linked stocks.
- Samsung Electronics and SK Hynix, both major chipmakers, saw their shares fall over 12%.
- Weakness spread across Asian markets, with Japan's Nikkei 225 down 3.6% and Hong Kong's Hang Seng Index down over 2%.
South Korea's stock market experienced a significant downturn on Tuesday, with the Kospi index plummeting nearly 10% in its steepest decline since March 4. The sell-off was triggered by a global tech sell-off, particularly affecting artificial-intelligence-related stocks that had previously fueled a rally in the market. Investors are reportedly rotating into more defensive assets with predictable cash flows, moving away from highly valued tech names.
Chipmakers were at the forefront of the rout, with Samsung Electronics closing down 12.3% and SK Hynix down 12.5%. Both companies had recently joined the $1 trillion market capitalization club. The weakness in South Korea mirrored broader declines across Asia, with Japan's Nikkei 225 falling 3.6% and Hong Kong's Hang Seng Index dropping over 2%. Chinese benchmarks also registered losses.
The market sentiment was also influenced by higher Treasury yields and concerns surrounding the conflict in Iran. Analysts noted a loss of momentum in previously leading market segments, prompting a shift in investment strategies.