South Korea’s benchmark KOSPI index plunged more than 4% on Monday, extending a historic selloff as panic over artificial intelligence (AI) valuations overshadowed geopolitical relief.
The tech-heavy index surrendered its recent relief rally, dragged down by nearly 8% drops in semiconductor giants Samsung Electronics and SK Hynix Inc. (NASDAQ:SKHY), ignoring news that the U.S. had halted a planned military strike on Iran.
AI Selloff Deepens
The steep losses extend a brutal period for South Korean equities. In July, the KOSPI plunged 22.18%, marking its worst monthly performance since the 2008 global financial crisis. The rout has been fueled by the unwinding of heavy retail leverage and rising fears over slowing hyperscaler spending, exposing how crowded the AI trade had become.
Despite reporting stellar quarterly earnings last week, Samsung fell roughly 12.50%, and SK Hynix tumbled 4.82% over the last five trading sessions.
Together, the two memory-chip makers account for more than half of the KOSPI’s total weighting, leaving the broader market highly vulnerable to the global recalibration of AI-related stocks.
Geopolitical De-escalation Eclipsed
The tech-driven panic in Asian markets contrasted sharply with Western futures and commodities, which reacted positively to easing Middle East tensions. Global oil prices plunged nearly 5% after President Donald Trump announced he had called off a “massive attack” on Iran to resume negotiations.
“They knew the extent of the attack because they saw it forming,” Trump told reporters. “Now what we’re doing is we’re talking to them in the form of a negotiation. It begins tomorrow afternoon and we’ll see.”
Strait of Hormuz Uncertainty
Trump expressed optimism about reaching comprehensive agreements, stating, “There’s a deal on Hormuz and then there will be a deal on the nuclear.”
However, Iranian officials quickly pushed back. Iranian Foreign Ministry spokesperson Esmaeil Baqaei clarified that a recent shipping agreement with Oman does not guarantee the reopening of the critical waterway.
“The understanding between Iran and Oman regarding a new route is unrelated to the reopening or continued closure of the Strait of Hormuz,” Baqaei said.
How Has Kospi and its Heavyweight Constituents Performed?
At the last check, the KOSPI Index was 4.87% lower at 6,274.47 points; it was up 49.36% year-to-date, and higher by 101.77% over the year. It tumbled 6.83% over the last five sessions and 22.18% in July.
SK Hynix’s Korean-listed shares were up 144.09% YTD, 515.89% over the year, but down 34.47% in July. Similarly, Samsung was 101.63% higher YTD, 250.87% over the year, but lower by 21.89% in July.
SK Hynix’s U.S.-listed ADR declined by 15.45% since its listing, was up 0.50% over the last five sessions, and closed 3.54% lower at $143.73 on Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: OleksSH on Shutterstock.com
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