Korean Stocks Tumble 8% as Chip Selloff Deepens
Semiconductor selloff hammers Seoul; SK Hynix has erased US$660 billion from its peak and foreigners dumped US$1.8 billion in Korean stocks Thursday morning.
Korean stocks fell 8% Thursday as investors fled artificial intelligence-linked chip names, with SK Hynix down 57% from its summer peak.
Seoul just served up a brutal session. The Kospi dropped 8% on Thursday, and Korea's exchange halted trading for 20 minutes as chip giants SK Hynix and Samsung each slid more than 9%. If you thought the artificial intelligence (AI) trade was bulletproof, Thursday said otherwise.
What lit the fuse
Hot US inflation data landed. Consumer prices rose at the fastest pace in five months in September, and traders now expect the Federal Reserve to stay aggressive. Then CoreWeave’s bonds slid to around 78 cents on the dollar, a distress signal that had Elon Musk posting 'yikes' on his platform. Hebe Chen, an analyst at Vantage Global Prime, called Korea 'the shock absorber for the global AI selloff.'
Foreign money is heading for the exits
Foreign investors dumped US$1.8 billion of Kospi stocks on Thursday morning alone and have sold more than US$10 billion this month. The Kospi is on its seventh straight down day, heading for its lowest close since early April. Taiwan’s Taiex fell more than 3%, and China’s chip-heavy Star 50 hit its lowest since April. SK Hynix has now lost over US$660 billion from its peak after a 1,000% run in the year through June. The next key event is Taiwan Semiconductor Manufacturing Co's earnings later Thursday.
The takeaway: Korea’s AI darlings turned into the exit door, and until AI funding worries settle, volatility looks set to stay.
Summary written by Oh Cannot from the original report by FMT Business. Not financial advice.
