AI Stock Sell-Off Hammers Chipmakers as South Korean Market Plunges 25% in Month

AI stock sell-off continues as investors dump chipmakers

An AI stock sell-off continued on Tuesday as markets in Asia tumbled, with trading on South Korea's Kospi temporarily halted after it plunged 8 per cent and Tokyo sliding 4 per cent. Shares in SK Hynix shed as much as 10 per cent, while its larger rival, Samsung Electronics, fell more than 9 per cent. The two companies account for about 40 per cent of the South Korean stock market, giving them an outsized influence. The declines come after SK Hynix, the world's second-largest memory-chip maker, fell sharply in New York on Monday. Its American depositary receipts closed more than 7 per cent lower at $143 -- $6 lower than when they started trading earlier this month. The Seoul-listed shares of SK Hynix have now fallen about 45 per cent since hitting a record high above Won3mn ($2,041) in June, wiping about $570bn off its market value and marking one of the world's steepest declines over the period, second only to SpaceX. The shares had tripled earlier this year before peaking. SK Hynix's "stock has gone up too much, too fast this year, so this kind of correction is inevitable", said Chan H Lee, managing partner at Petra Capital Management, a Seoul-based hedge fund. "But we are likely to see a rebound soon as deleveraging is almost done and global funds will flow in again once they think the correction is complete." The Kospi's Tuesday decline meant the index has fallen by about 25 per cent over the past month and is down by a third from its June peak. It remains 46 per cent higher for the year to date, however. Japan's stock market also fell sharply on Tuesday. The Nikkei 225 dropped more than 4 per cent as chip stocks declined, with Kioxia plunging as much as 18 per cent. The broader Topix was down closer to 3 per cent. Traders in Tokyo have been shocked by the speed of the move, blaming rising interest rates for triggering an unwinding of momentum and retail-driven positions. "I can't remember seeing anything this bad or violent," said one senior equities trader. Kioxia, the Japanese memory chip company, has plunged 50 per cent in the past month. The group, which was taken private in 2018 by a Bain Capital-led consortium that included SK Hynix, had briefly been Japan's biggest company by market value. Other semiconductor-related stocks, including Lasertec, Disco, Tokyo Electron and Renesas, were also sharply down on Tuesday. The Nikkei 225 is now down almost 15 per cent since hitting a high of more than 72,000 points in June. The sell-off reflects growing investor doubts about the durability of Big Tech spending on AI infrastructure. Although SK Hynix is expected to post another quarter of record earnings on Wednesday, investors fear that soaring memory prices could eventually curb demand as customers seek to reduce usage or switch to cheaper alternatives. Concerns over future oversupply have also weighed on sentiment after South Korea's leading chipmakers recently unveiled aggressive expansion plans. SK Hynix and Samsung plan to build two new chip plants apiece in South Korea as part of a combined Won800tn ($530bn) investment to double their production capacity for DRam chips over five years. US rival Micron Technology has also raised planned domestic investment to $250bn to the end of 2035. Analysts expect SK Hynix on Wednesday to report second-quarter operating profit of about Won64tn, up sevenfold from a year earlier, with revenue more than tripling to roughly $57bn. Despite the market jitters, analysts remain positive on the industry's near-term outlook, citing long-term supply agreements that improve earnings visibility. "Their capacity to increase conventional memory chips will be limited as they expand [high-bandwidth memory chip] production next year," said KB Securities analyst Kim Dong-won, expecting sales to Big Tech companies and data-centre operators to account for 70 per cent of the company's revenue, up from 30 per cent in 2017. Some analysts said the recent sell-off has made SK Hynix shares increasingly attractive, trading at just 4.4 times forward earnings, below Micron's 6.2 times. Shawn Oh of NH Investment & Securities said in a note that the recent pullback has made SK Hynix a "compelling buy", citing its attractive valuations and ongoing deleveraging among Korean retail investors.

In Another Wild Day for South Korean Stocks, Market Surges 18 Percent

These days, South Korea's stock market can only be described as wild. The country's benchmark KOSPI rose 18 percent on Friday, capping a volatile week marked by huge price swings that triggered mandatory pauses in trading on Tuesday and Wednesday to give the market a breather during sharp sell-offs. The Seoul stock market has become the epicenter of both investment enthusiasm and anxiety related to artificial intelligence, making trading on it extremely volatile. The shifting sentiment has been focused on two leading chip suppliers to the A.I. data center building boom, Samsung Electronics and SK Hynix. And they account for more than half the value of the local market. Shares of Samsung soared 27 percent on Friday, while SK Hynix climbed 30 percent. Before Friday's rally, the South Korean market had tumbled on growing concerns that the enormous spending -- expected to top $1 trillion over this year and the next -- to build out A.I. systems had been overdone. As the prime beneficiaries of that investment, Samsung and SK Hynix were at risk if major technology companies decided to splurge less on A.I. infrastructure. For people still searching for rational explanations, the KOSPI's rise on Friday came on the heels of comments from Microsoft and Amazon that they plan to continue spending more on building computing capacity for A.I. despite already staggering outlays. In addition, new regulatory measures from the South Korean government aimed at easing market volatility kicked in Friday, lifting hopes that better days lay ahead for the KOSPI, which had fallen about 25 percent in the last month. Across Asia, other markets and companies exposed to A.I. spending saw strong gains -- albeit tame by comparison to the KOSPI. Japan's Nikkei 225 rose 4 percent. In Taiwan, the stock market jumped 8 percent, propelled by a 10 percent rise in shares of Taiwan Semiconductor Manufacturing Company, the most valuable firm there and the producer of Nvidia's advanced A.I. chips. Despite the recent pullback, the KOSPI remains one of the world's best-performing stock markets this year, up nearly 50 percent. "The KOSPI has been trading like a meme stock or crypto," said Khoon Goh, head of Asia research at ANZ, an Australian banking group. "It's not normal behavior for a major index." The whipsaw in the KOSPI, now trading above 6,500, is driven mainly by Samsung and SK Hynix. Their memory chips store and shuttle the massive amounts of data used in training and running A.I. models. The stock prices of both companies had dropped sharply over the last month, even as they reported huge increases in revenue and profit and said they can't keep up with demand. Mr. Goh said the recent sell-off on the KOSPI was fueled in part by retail investors who had borrowed heavily to take a position in the two companies. When the share prices started falling, they were forced to sell, accelerating the downturn. Now that the more speculative buyers have cleared out, Mr. Goh said, foreign investors and others are returning to the South Korean market -- seeing an opportunity to buy still promising shares on the cheap.

Is AI facing a big financial reckoning?

Sharp falls in the value of chip makers have stoked investor concerns that the euphoria around AI related companies is fading. Shares in Korean chip makers SK Hynix and Samsung are down 46% and 35% respectively over the last month as investors worry the recent boom in demand for the chips that power AI is unsustainable. The South Korean stock market is notoriously volatile, but concerns have spilled over into the big US companies with Micron and Intel which have seen falls of 28% and 35% since last month. "The AI bubble hasn't burst but it's letting out air," leading tech investor Eileen Burbidge told the BBC, as a number of factors in different parts of the AI ecosystem are darkening the mood. One of the triggers for the recent falls was a reported breakthrough in the chip manufacturing process by a Chinese company, potentially making China more self-sufficient in chip design and production. That has added to lingering concerns that the big AI companies - Meta, Alphabet, Open AI, Anthropic - will find it hard to charge end users enough to justify the hundreds of billions being spent on buying the chips and building the data centres that power the technology. While increased spending on AI has historically been welcomed by investors in the so called hyperscalers, dialling up the spending has recently not been met with the former enthusiasm. Meta shares are down 15% over the last month, while SpaceX - which is predominantly an AI company - has seen its shares fall 14% from its much-hyped IPO debut and nearly 50% from its peak in June. Meanwhile Apple - which has largely sat out the AI arms race - has seen its shares rise 21% over the last month to reclaim its title as the world's most valuable company from chip maker Nvidia. London's benchmark FTSE 100 index, which does not contain any major tech companies, also briefly touched a record high on Wednesday morning - one of the few periods where it has benefited from not being tech-heavy. Some have likened the transformative potential of AI to the introduction of electricity or the railways. While it is true that the railroads transformed economies - particularly of the US - plenty of people lost money along the way. Unlike rail tracks - which once built are good for decades - data centres are likely to need upgrading frequently to include the latest and fastest processors. Add to that lot, concerns that some of the big AI companies have taken big stakes or lent money to each other leading to circular funding that means that any potential failures could have a damaging impact on the fortunes of others. There is also increasing cultural opposition to the build out and adoption of AI. A growing number of national, state or local governments are pausing, banning or restricting new data centre construction on environmental grounds thanks to their vast water and energy needs. Meanwhile, high profile AI advocates have found themselves booed by students who fear that AI will replace many graduate level jobs. Despite all of that, Eileen Burbidge is still positive. "I see the glass half full - if you bought shares in chip makers a year ago you are feeling pretty good right now." Shares in Samsung and SK Hynix are up threefold and fivefold respectively over the last year, leading many to conclude that caution and profit taking after such massive gains was inevitable - and indeed healthy. But there is no doubt that investors are watching companies plans for spending and their projections for when they get paid back with post euphoric scrutiny.

Investors ditch chip stocks as fears of AI bubble grow

Once again, fears of an AI investment bubble are rattling investors. Earlier, trading on South Korea's stock market had to be halted after a steep sell-off. The latest bout of nerves is being caused by news that chip giant Nvidia is investing three-quarters of a trillion dollars to help fund artificial intelligence infrastructure projects. Sceptics call this 'circular financing', where a supplier invests money in its customers, artificially inflating demand. South Korean shares slumped 10 percent, led by chip maker SK Hynix and tech giant Samsung, which dominate the market there.

Shares in Asian chip firms plunge further as AI sell-off continues

Drop comes after South Korean company SK Hynix's results undershot investors' expectations Shares in companies linked to AI have plunged further after disappointing results from the South Korean chipmaker SK Hynix, sending the country's stock market tumbling for the second day in a row. Seoul's Kospi index, which is dominated by semiconductor manufacturers, slid by as much as 12.6% at one point on Wednesday, following on from a near 11% slump the previous day, reaching its lowest level since early April. This means the market is poised for a record two-day fall, representing a remarkable drop of more than 40% from a peak reached a little over a month ago. Japan's Nikkei also declined 1.5%. Meanwhile, the oil price continued to climb, after the US military said it had knocked down an Iranian missile barrage and worked with Saudi Arabia's forces to strike sites in Iraq that Tehran-backed militias have recently used to launch attacks. Brent crude, the international benchmark, reached $87.14 a barrel, a rise of about 3.6%, in early trading. SK Hynix, which produces the chips essential to the expansion of AI datacentres, reported record profits for the second quarter, but this still undershot investors' expectations. That prompted a sell-off that drove its shares down by as much as 16%. Shares in the fellow chipmaker Samsung Electronics also tumbled further, trading almost 10% lower. The two companies together account for more than half of the market capitalisation of the Kospi, which has led to them holding sway over the market this year. The companies have brought in cash from investors looking to become involved in the lucrative AI trade amid the global shortage of advanced memory chips. Analysts said disappointment over SK Hynix's earnings highlighted investors' concerns about how long tech companies can continue their spending spree on the technology. "SK Hynix delivered strong results, but in today's AI market, strong is no longer enough," said Gary Tan, a portfolio manager at Allspring Global Investments in Singapore. "Investors were looking for additional catalysts, particularly around long-term agreements and shareholder returns, to support a memory sector that has become the epicentre of the AI trade." Shares in US chip companies also fell on Wall Street on Tuesday, with Intel, Advanced Micro Devices, Sandisk, Western Digital Corp and Seagate Technology all sliding. Apple benefited from these falls, as investors losing confidence with AI stocks sought out a safe haven. The iPhone maker's stock briefly rose to take it above the $5tn (£3.76tn) valuation mark, the second ever company to achieve this. Shares in Taiwan's TSMC, the world's largest contract chipmaker, also fell on Wednesday, taking it 3% down in Taipei. Analysts said small-time investors had led the charge on buying chipmakers' stocks, many using borrowed money. While this pushed stocks higher in last month's rally, it has also worsened the sell-off as many have pulled their money out. "Hopes of the market rebounding today after a 10% plunge yesterday faded, triggering panic selling and forcing most stock investors to book losses," said Han Ji-young, an analyst at Kiwoom Securities. South Korea's finance minister, Koo Yun-cheol, told the national assembly the government was reviewing market stabilisation measures.

Chip firms fall in US and Asia as AI jitters rattle investors

Shares in major chip firms have fallen sharply in the US and Asia as a sell-off in artificial intelligence-related stocks deepened. Trading on South Korea's benchmark Kospi index was paused temporarily on Tuesday morning after sliding by 8%. It fell further after the 20-minute halt was lifted to trade around 10% lower. The slump was led by technology firms, with Samsung Electronics and SK Hynix both falling by more than 10%. It comes after AI chip giant Nvidia fell by 5% in New York on Monday, meaning it lost its position as the world's most valuable listed company to Apple. The tech-heavy Kospi has been halted eight times so far this year under a stock market mechanism known as a circuit breaker, which is designed to calm panic selling. The index had more than doubled from the start of the year to mid-June but has since lost around a third of its value. In recent months, stock market trading has been particularly volatile in South Korea as it has attracted large numbers of retail investors. On Monday, US-listed shares in SK Hynix fell by 7.5% to well below the $149 offer price when it made a record-breaking debut on the Nasdaq on 9 July. Japan's Nikkei 225, which is also dominated by tech companies, was almost 4.5% lower on Tuesday morning. Nvidia shares fell on Monday after the Wall Street Journal reported that it is in talks to provide around $250bn for OpenAI as part of a massive data-centre project. The BBC has contacted Nvidia and OpenAI for comment. The decline allowed Apple to overtake Nvidia as the world's most valuable company after the iPhone maker rose by about 25% this year. As governments and companies spend hundreds of billions of dollars on developing AI capabilities, some analysts have questioned whether the technology can become profitable enough to recoup such huge investments.

AI sell-off intensifies as investors ditch chip stocks

Samsung and SK Hynix fall by more than 10% amid renewed fears over AI spending and Chinese competition The sell-off in AI stocks has intensified, driving South Korea's stock market down to its lowest level in three months. Investors continued to ditch chip stocks on Tuesday, amid rising concerns about the huge amount of borrowing among AI companies to fund their datacentre expansion plans. The South Korean semiconductor companies SK Hynix and Samsung Electronics fell by more than 10%, dragging the country's Kospi share index down to its lowest point since mid-April. Analysts attributed the sell-off to renewed worries over AI investment spending, and competition from cheaper Chinese companies, after a report by the Information that China has begun mass production of homegrown deep ultraviolet(DUV) chip-making tools. "We believe the market was likely spooked by the progress of China's chip-making equipment capabilities, and was worried that this progress would threaten the competitive position of global chip making and chip equipment leaders," said Jing Jie Yu, an equity analyst at Morningstar, adding that the sell-off was "largely a kneejerk reaction and overdone". On Monday, shares in the Chinese memory chip maker CXMT rose by 466% when it floated on the Shanghai stock exchange, underlining China's drive to create its own AI supply chain. Investors may also be growing jittery about the "circular funding" at the heart of the AI industry, through which artificial intelligence firms finance one another. On Monday, the Wall Street Journal reported that Nvidia was in discussions with OpenAI about providing $250bn (£188bn) for a massive datacentre project in Ohio. Backing from Nvidia, which has an investment grade credit rating, could make it less expensive to raise funding for the project. News of the talks knocked Nvidia's shares on Monday; they closed 5% lower, while the cost of insuring the chip company's debt against default using a credit default swap (CDS) rose. "The market reaction to the Nvidia news was swift. Nvidia fell 5% and closed the session below the $200-per-share mark. More importantly, Nvidia's five-year CDS spiked, suggesting that it may not yet be the right time to buy the dip," said Ipek Ozkardeskaya, a senior analyst at Swissquote.

AI sell-off deepens as chip stocks slump in market retreat - business live

Stock markets are tumbling in Asia, as an AI sell-off pushes investors to dump some of the biggest chip stocks in the industry. The South Korean Kospi dropped more than 10% on Monday, with trading halted at one point, and Japan's Nikkei fell more than 4%. Shares in the chip companies SK Hynix and Samsung Electronics both fell by more than 10%. It follows a rough day of trading in the US too - SK's US-listed shares dropped 7% on Monday, and chip designer Nvidia dropped 5%, giving Apple back its top spot as the world's biggest listed company. Investors are growing increasingly fearful of the huge amount of borrowing among AI companies - and a report from the FT last night highlighted that prices for credit default swaps ( a tool to bet against corporate debt) tied to the likes of Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia have risen to record highs in recent days. Jim Reid, of Deutsche Bank, says markets are "caught between a new sell-off in chipmakers and the positive news that the US-Iran pause from over the weekend would continue as both sides negotiate in talks." This meant that the S&P 500 (+0.02%) and Nasdaq (-0.16%) were little changed yesterday after an initial rally, whilst the Philly Semi Stock Exchange Index (-2.23%) fell further. The equity performance also wasn't helped by new highs in real yields, though nominal 10yr Treasury yields (-2.8bps) came down as Brent crude fell -8.70% yesterday, in its largest decline since April. It is an additional -2.0% lower this morning, trading at $86.59/bbl, after being at $101 on Friday morning. S&P 500 (-0.22%) and Nasdaq (-0.74%) futures are lower this morning. The AI sell-off also comes even after a flying market debut for the Chinese chip company CXMT, which joined Shanghai's stock exchange on Monday and surged by more than 400% in its first day of trading.

Global Market: Samsung, SK Hynix plunge up to 11% as investors reassess AI chip boom

South Korean chip stocks experienced sharp declines on Tuesday. Major companies like Samsung Electronics and SK Hynix saw significant drops. Investors scaled back artificial intelligence-related bets due to spending sustainability worries. Concerns over China's semiconductor advancements also fueled market unease. This selloff reflects a broader reassessment of AI valuations and future demand. South Korean semiconductor stocks tumbled on Tuesday, with major chipmakers Samsung Electronics and SK Hynix witnessing sharp declines as investors scaled back artificial intelligence-related bets amid growing concerns over the sustainability of AI infrastructure spending and rising competition from China, Reuters reported. Samsung Electronics shares fell as much as 9.5%, while SK Hynix dropped as much as 10.9%. The broader benchmark KOSPI was trading 7.3% lower as of 0032 GMT, reflecting a broad-based selloff across the technology sector. According to Reuters, the decline followed a series of developments that renewed investor concerns about the durability of the AI-driven semiconductor rally, which has lifted chip stocks globally over the past year. SK Hynix, a key supplier of high-bandwidth memory (HBM) chips used by Nvidia for advanced AI computing systems, has been among the biggest beneficiaries of surging demand for AI infrastructure. However, its strong exposure to the AI theme has also made the stock more vulnerable to shifts in investor sentiment. The company's U.S.-listed shares had already come under pressure overnight, closing at $143.02, below their initial public offering price of $149. Analysts cited a combination of factors behind the selloff, including concerns over AI infrastructure financing, China's semiconductor advancements and intensifying competition in the global memory chip market. Investor sentiment weakened after a Wall Street Journal report suggested Nvidia could provide a financial backstop of around $250 billion for an OpenAI data-centre project. The report pushed Nvidia shares down nearly 5% as investors questioned whether the AI chip leader could be taking on greater financial exposure by supporting its customers' infrastructure expansion, Reuters said. Meanwhile, reports of China making progress in developing domestic deep ultraviolet (DUV) lithography technology added to market concerns. Such advancements could help China reduce dependence on Western semiconductor equipment suppliers despite restrictions imposed by the United States on access to advanced chip technologies. Investors were also watching the rise of lower-cost Chinese open-source AI models, including Kimi K3, which raised questions about whether future AI workloads would require the same level of computing power previously anticipated. A potential moderation in AI demand could affect future requirements for advanced processors and high-bandwidth memory chips. Adding to concerns, Chinese memory chipmaker CXMT delivered a strong debut in Shanghai, fuelling worries about increasing competition in the global memory semiconductor industry. Reuters also reported that investor unease was heightened by reports that Apple had been lobbying the Trump administration to permit the use of Chinese-made chips in some of its products, further intensifying concerns about China's growing semiconductor capabilities. The sharp decline in South Korean chip stocks highlights a broader reassessment among investors over AI-related valuations, funding models and the long-term outlook for semiconductor demand after a prolonged rally driven by expectations of rapid AI adoption.

KOSPI Sinks Over 12% in Worst Two-Day Drop Ever as AI Chip Sell-Off Deepens After SK Hynix Misses Expecta

Index Bleeds From 52-Week Highs The heavy losses compound a horrific month for South Korean equities. Following a massive nearly 11% crash on Tuesday, the KOSPI's latest 5.99% slide pushes the index significantly lower, falling over 39.66% from its 52-week high of 9,385.59. Because heavyweights Samsung Electronics and SK Hynix account for more than half of the KOSPI's total weighting, the index has become a direct proxy for global AI hardware sentiment. While SK Hynix fell 9.61%, Samsung slid 5.23% on Wednesday, both contributing to KOSPI's decline. This increasing alignment strips investors of key portfolio shields, erasing the geographic diversification benefits they previously sought in the Asian market. According to market commentator Barchart and Reuters, South Korea's KOSPI closed after a historic two-day plunge, with losses of more than 12.6%, marking one of the worst two-day declines in the index's history. Record Profits Eclipsed by Market Fear The South Korean chipmaker reported operating profit of 60.54 trillion KRW ($41.62 billion), up 557% from a year earlier, but below the 64 trillion KRW ($43.99 billion) forecast compiled by LSEG SmartEstimate. The memory-chip maker also noted that its enterprise SSD revenue increased twofold from the previous quarter, and revenue from high-capacity enterprise SSDs expanded more than threefold. Despite these robust figures, investors aggressively dumped the stock. Market sentiment was severely dampened by the blockbuster IPO of China's ChangXin Memory Technologies (CXMT) and reports of Chinese state-backed breakthroughs in lithography equipment. The Threat of Foreign Rivals Analysts pointed out that future competitive threats are heavily outweighing the South Korean chipmaker's current successes. According to Reuters, "The market's concern lies less in CXMT's current earnings and more in its potential for accelerated capacity expansion to rival Korean companies and technology development following its IPO," said Kim Seok-hwan, a Seoul-based market analyst at Mirae Asset Securities. To address these overarching market concerns, SK Hynix executives emphasized that AI technology is evolving into an agentic form, which will continue to drive a structural shift in demand where both AI memory and conventional memory grow together. Nevertheless, the relentless tech slump continues to heavily drag down the broader Korean stock market. How Have KOSPI and SK Hynix Performed? While the KOSPI Composite Index fell 33.10% since June 30's close and 16.66% over the last five sessions, it returned 34.44% on a year-to-date basis. It closed 5.99% lower at 5,663.24 points on Wednesday. Meanwhile, SK Hynix was 9.61% lower in Wednesday's session on the Korean market, up 115.21% YTD, but down 46.69% over the month and 23.44% over the last five sessions. The U.S.-listed ADR, on the other hand, closed 8.98% lower at $130.17 on Tuesday, and it was 23.43% lower since its recent listing. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Kospi, Nikkei 225 Rise After Microsoft, Amazon Lift AI Confidence

Asian stock markets bounced back strongly on Friday after Microsoft and Amazon posted better-than-expected earnings. Strong cloud growth renewed confidence in AI spending and lifted technology shares across South Korea, Japan, and Taiwan. The Kospi recorded its biggest one-day gain, while the Nikkei 225 also climbed sharply as investors returned to AI-related stocks. The rally started after showed that heavy spending on AI and data centers continues to deliver strong business growth. Microsoft reported strong Azure growth, while Amazon's AWS business posted its fastest expansion in several quarters. Their results eased worries that AI investments were slowing. "The previous sell-off had become exaggerated because the underlying AI demand story had not materially weakened," said IG market analyst Fabien Yip. and SK Hynix led South Korea's recovery after suffering heavy losses earlier this week. Their sharp gains pushed the Kospi higher, although the index remained far below its June peak and stayed on track for its weakest July since 1997. Japan's Nikkei 225 also moved higher after the Bank of Japan kept interest rates unchanged. Even so, a weaker yen, high US bond yields, and geopolitical tensions continued to create uncertainty for investors. Analysts believe strong earnings have restored confidence in AI stocks, although the market still needs steady profits and healthy demand to keep the recovery moving.

Korea's AI Rocket Ship Lifts Off Again

Global investors appear to have treated the washout as an opportunity to rebuild exposure to two companies sitting near the centre of the AI hardware chain. Takeaways by Dark Side of the Boom ™ * Korea's record rebound looks less like a fresh speculative surge and more like the violent reversal of a forced deleveraging event. * Foreign investors bought a net 7 trillion won of Kospi shares while local retail investors sold heavily into the recovery. * Samsung Electronics and SK Hynix remain the cleanest Asian expressions of the global AI capital-spending cycle. * The washout may have cleared the weakest leverage, but thinner liquidity means investors should still expect oversized daily swings. Korea's AI Rocket Ship Lifts Off Again South Korean equities did not merely bounce on Friday. They blasted back into orbit. The KOSPI surged as much as 17%, its largest advance on record, after losing roughly the same amount over the previous three sessions. SK Hynix briefly approached Korea's 30% daily trading limit, while Samsung Electronics climbed as much as 26%. Those numbers sound absurd in isolation, but the rebound makes considerably more sense when viewed through the mechanics of the earlier collapse. The selloff was never simply a sudden rejection of the AI investment story. Korea had become one of the most concentrated and heavily leveraged expressions of that story. When doubts emerged around hyperscaler debt, capital intensity and potential Chinese competition, the initial decline triggered margin calls, leveraged ETF rebalancing and forced liquidation. Once that process begins, price stops being an expression of fundamental value and becomes an instruction from the risk manager. Sell what you can. Reduce gross exposure. Meet the margin call. Ask questions later. Friday was that machinery moving violently in reverse. A report that Citadel bought a big chunk of the AI stocks held by hedge fund Situational Awareness also bolstered sentiment that the selloff may near its end. Situational Awareness, which owned shares in a number of Asia-based companies including SK Hynix, has been offloading its holdings after suffering losses in the AI stock rout. According to Bloomberg, overseas investors purchased a net 7 trillion won of Kospi shares, equivalent to about $4.8 billion. Korean retail investors, by contrast, sold approximately 6.8 trillion won into the recovery. That divergence is worth watching. Global investors appear to have treated the washout as an opportunity to rebuild exposure to two companies sitting near the centre of the AI hardware chain. Domestic investors, many of whom had endured the full force of the decline through leveraged products and margin accounts, understandably used the rally to get some risk off the table. "The market went from throwing AI stocks overboard to fighting for the remaining seats before most traders had finished writing the obituary," Stephen Innes of SPI Asset Management said in a commentary. South Korea's Kospi index jumps more than 16% on a surge of chipmaking stocks (Via AP) I would be careful about interpreting the 17% surge as proof that the entire correction is finished. Markets rarely move cleanly from forced liquidation back into a stable bull trend in a single session. But the rebound does suggest the most disorderly phase of the deleveraging may now be behind us. The broader AI backdrop also turned supportive at exactly the right moment. Microsoft's (NASDAQ:MSFT) spending plans helped restore confidence that the hyperscaler capital-expenditure cycle remains intact. Amazon (NASDAQ:AMZN) reinforced that message after the US close, reporting strong cloud growth and signalling further AI investment. US technology stocks recovered, Taiwan rallied and investors returned quickly to the Asian semiconductor names that had suffered the greatest damage. That is why I continue to view semiconductors as the purest market expression of the AI buildout. Software narratives can change quickly. Valuations can be debated endlessly. But when Microsoft, Amazon, Meta and Google continue pouring capital into data centres, servers and computing capacity, that spending eventually flows into chips, memory, packaging, power infrastructure and cooling systems. Samsung and SK Hynix sit directly in that spending stream. Their earnings had remained resilient even while their share prices were being crushed. That was an early warning that the market decline had moved beyond a normal reassessment of profits and into something far more mechanical. SK Group Chairman Chey Tae-won's personal purchase of 3,620 SK Hynix shares added a symbolic vote of confidence. The transaction, worth roughly 4.8 billion won, was his first direct open-market investment in the chipmaker. The purchase itself is far too small to alter the company's valuation, but markets pay attention when insiders step forward during periods of maximum stress. It tells investors that the people closest to the business do not see the collapse in the share price as confirmation that the underlying franchise has suddenly broken. The Korean government has also moved to contain the leverage problem. Authorities introduced higher deposit requirements for leveraged exchange-traded funds linked to Samsung and SK Hynix, following several sessions in which compulsory rebalancing amplified already extreme price moves. Seoul has also pledged approximately $13.9 billion for strategic AI investments through the country's sovereign wealth fund. These measures will not eliminate volatility, nor should that be the goal. The more important task is to prevent leverage products from repeatedly turning ordinary market declines into self-reinforcing liquidation events. The encouraging part of Friday's rebound is that the speculative foam appears to have been stripped away without destroying the underlying earnings story. The uncomfortable part is that Korea has now demonstrated how quickly concentrated positioning can overwhelm fundamentals in both directions. A 17% decline followed by a 17% rebound is not a healthy price-discovery process. It is the signature of a market operating with too much leverage, too little liquidity and too many investors crowded into the same expression. Still, the AI trade has survived another stress test. The weakest positions have been flushed, global funds are returning and hyperscaler spending remains pointed higher. That does not mean investors should chase a 20% or 30% daily move in a semiconductor stock. It does mean the burden of proof has shifted back toward those arguing that the AI capital cycle is already rolling over. My read is that Korea has moved from panic into repair. The market will remain volatile, and the next stage will probably involve consolidation rather than another straight-line surge. But beneath the leverage, ETF rebalancing and retail capitulation, the core investment argument remains visible. The AI boom may have lost some speculative excess. It has not yet lost its economic engine.

AI rally lifts markets, Dax flirts with record high

Investors' enthusiasm for chip stocks returned after encouraging growth figures from Microsoft and Amazon. Strong cloud growth and capital spending that came in below fears eased concerns about runaway costs for artificial intelligence (AI). Microsoft shares soared more than 15% on Thursday. Amazon stock was up 12% in premarket trading. 'Artificial intelligence is without doubt the most important structural growth driver of the coming years,' said Serge Nussbaumer, a capital markets expert at Maverix. AI COMEBACK POWERS ASIA, GEOPOLITICS REMAINS A DRAG In Asia in particular, investors snapped up semiconductor names that had recently fallen sharply. South Korea's benchmark Kospi shone with a record jump of 17.9%. Japan's Nikkei index rose 4%. In Taiwan, the benchmark index climbed 8%. The European technology index gained 1.3%. Infineon was the biggest winner in the Dax, up around 6%. Whether the market has now been cleansed and is in a position to form a new base remains to be seen, strategists say. 'But hope is growing that AI stocks may now have priced in enough risk,' said Jochen Stanzl, chief market analyst at Consorsbank. Still, the geopolitical backdrop is a risk factor for markets. 'The powder keg in the Middle East is driving big swings in the energy market, where traders are oscillating hourly between escalation fears and relief,' said ActivTrades analyst Frank Sohlleder. Combined with fears of a Fed monetary tightening in September, volatility is likely to remain high. Rising inflation remains a concern for markets. Goods and services in the euro zone rose an average of 2.9% in July compared with the same month a year earlier. UNIVERSAL SLIDES, YEN LEVEL IN FOCUS Europe's earnings season also delivered fresh catalysts. Investors pulled the plug on Puma amid persistent sales weakness at the sporting goods maker. The shares fell as much as 6.6%. The declining sales underscored how difficult it is to revive the brand's appeal, Jefferies analysts said. Concerns about slowing growth in the streaming business sent Universal Music shares into a tailspin. The stock of the world's largest music company plunged 23% in Amsterdam. In its wake, shares in major shareholder Vivendi slid 14%. Credit Agricole shares rose 3.4% after quarterly results came in better than expected. In currency markets, investors kept an eye out for Japanese yen interventions after the central bank (BOJ) kept rates steady. On Thursday, the Japanese currency had gained as much as 3.6%. According to insiders, authorities intervened in the foreign exchange market by buying yen and selling dollars to support the weak local currency. (Report by Anika Ross. For inquiries, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)

Korea's Kospi Logs Record Daily Gain, Defying Efforts to Tame Wild Swings -- Update

South Korea's share market achieved its biggest daily rise on record, confounding officials' attempts to limit wild swings in equities and restrain mom-and-pop investors from taking on debt to buy stocks exposed to the global AI boom. The benchmark Kospi index, dominated by the nation's largest chip makers Samsung Electronics and SK Hynix, closed 18% higher on Friday in a dramatic reversal of a selloff over the previous three trading days. It means five of the 10 largest single-day moves in the Kospi's history have occurred since March, while three of the four biggest one-day declines in the past decade happened in the past five weeks, according to LSEG data. The Kospi's surge to end the week eclipsed a 12% daily gain in the midst of the global financial crisis in October 2008. Friday's rally came after U.S. hyperscalers Amazon and Microsoft said that they have lifted capital spending due to higher memory costs amid a global supply shortage, as surging AI demand continues to outpace production capacity. The announcements fanned new demand for the Korean chip makers while easing concerns around the sustainability of massive AI infrastructure spending that had recently weighed on their stocks. "The gamification of the stock market has led to such gyrations driven less by fundamentals but by news flows and fads," said Peter S. Kim, global strategist at KB Financial Group. For policymakers, the volatility has become a major headache. Regulators have imposed increasingly stringent restrictions on single-stock leveraged exchange-traded funds tracking the country's two leading chip makers, which they say have amplified market swings since their launch in May. The products have attracted a surge of retail investors using margin financing. That propelled South Korean chip stocks to record highs earlier this year, but it coincided with a rapid exit of foreign institutional investors over the same period due to heightened risks, KB Financial Group data show. The rapid boom-and-bust moves have led to the Korean market being dubbed the "Squid Game" market, a reference to the country's popular dystopian survival thriller series in which desperate characters resort to violence in a bid to win cash. "The country has turned into a casino," opposition lawmaker Lee Jongwook said in a recent parliamentary hearing. Regulators began taking action in mid-July, including the temporary suspension of single-stock leveraged ETF listings, introducing a higher minimum cash deposit requirement for investments and imposing a hard cap limiting individual investors' holdings of these leveraged funds to 20% of their total portfolios. These efforts appear to have had little effect in calming markets, illustrated by this week's sharp swings. "We expect market volatility to remain high," said BNP Paribas analyst William Bratton, putting South Korea at the heart of the debate over the sustainability of the AI-fueled tech supercycle. Some analysts believe the outlook for Korean chip makers is strong as they get record orders and higher prices for their memory chips. This week, both Samsung Electronics and SK Hynix reported double-digit-fold increases in quarterly profit. Josh Gilbert, APAC lead analyst at etoro, said the rebound in equities reflects investor confidence in the fundamentals of both companies. "Investor anxiety seems to stem from this boom being driven by price rather than volume," he said. "But right now demand isn't slowing and the numbers speak for themselves." According to BNP Paribas's Bratton, improving fundamentals will only increase the attractiveness of Korea's tech valuations. With chip shortages likely into the medium term, KB Financial's Kim expects Samsung and SK Hynix to retain robust pricing power because of their technological edge, strong balance sheets and dominant market share. These are unlikely to be threatened by rising Chinese competition for the foreseeable future and means current sector volatility is more a mid-cycle correction than a signal that the AI boom has peaked, Kim said. "In the end, fundamentals and earnings visibility make the current correction an opportunity for those who can withstand short-term volatility," he said.

Korea's Kospi Heads for Record Daily Gain, Defying Efforts to Tame Wild Swings

South Korea's share market is on track for its biggest daily rise on record, confounding officials' attempts to limit wild swings in equities and restrain mom-and-pop investors from taking on debt to buy stocks exposed to the global AI boom. The benchmark Kospi index, dominated by the nation's largest chipmakers Samsung Electronics and SK Hynix, jumped over 17% on Friday in a dramatic reversal of a selloff over the previous three trading days. It means five of the 10 largest single-day moves in the Kospi's history have occurred since March, while three of the four biggest one-day declines happened in the past five weeks, according to LSEG data. The Kospi's surge to end the week eclipsed a 12% daily gain in the midst of the global financial crisis in October 2008. Friday's rally came after U.S. hyperscalers Amazon and Microsoft said overnight that they have lifted capital spending due to higher memory costs amid a global supply shortage, as surging AI demand continues to outpace production capacity. The announcements fanned new demand for the Korean chipmakers while easing concerns around the sustainability of massive AI infrastructure spending that had recently weighed on their stocks. "The gamification of the stock market has led to such gyrations driven less by fundamentals but by news flows and fads," said Peter S. Kim, global strategist at KB Financial Group. For policymakers, the volatility has become a major headache. Regulators have imposed increasingly stringent restrictions on single-stock leveraged exchange-traded funds tracking the country's two leading chipmakers, which they say have amplified market swings since their launch in May. The products have attracted a surge of retail investors using margin financing. That propelled South Korean chip stocks to record highs earlier this year, but it coincided with a rapid exit of foreign institutional investors over the same period due to heightened risks, KB Financial Group data show. The rapid boom-and-bust moves have led to the Korean market being dubbed the "Squid Game" market, a reference to the country's popular dystopian survival thriller series in which desperate characters resort to violence in a bid to win cash. "The country has turned into a casino," opposition lawmaker Lee Jongwook said in a recent parliamentary hearing. Regulators began taking action in mid-July, including the temporary suspension of single-stock leveraged ETF listings, introducing a higher minimum cash deposit requirement for investments and imposing a hard cap limiting individual investors' holdings of these leveraged funds to 20% of their total portfolios. These efforts appear to have had little effect in calming markets, illustrated by this week's sharp swings. "We expect market volatility to remain high," said BNP Paribas analyst William Bratton, putting South Korea at the heart of the debate over the sustainability of the AI-fueled tech super-cycle. Some analysts believe the outlook for Korean chipmakers is strong as they get record orders and higher prices for their memory chips. This week, both Samsung Electronics and SK Hynix reported double-digit-fold increases in quarterly profit. Josh Gilbert, APAC lead analyst at etoro, said the rebound in equities reflects investor confidence in the fundamentals of both companies. "Investor anxiety seems to stem from this boom being driven by price rather than volume," he said. "But right now demand isn't slowing and the numbers speak for themselves." According to BNP Paribas's Bratton, improving fundamentals will only increase the attractiveness of Korea's tech valuations. With chip shortages likely into the medium term, KB Financial's Kim expects Samsung and SK Hynix to retain robust pricing power because of their technological edge, strong balance sheets and dominant market share. These are unlikely to be threatened by rising Chinese competition for the foreseeable future and means current sector volatility is more a mid-cycle correction than a signal that the AI boom has peaked, Kim said. "In the end, fundamentals and earnings visibility make the current correction an opportunity for those who can withstand short-term volatility," he said.

Korean Equities Lead Asian Rally on Renewed AI Enthusiasm

South Korean stocks surged Friday morning on renewed enthusiasm over spending related to the artificial-intelligence boom, leading the region's equity markets higher, while the yen weakened, giving up some of its sharp gains overnight. Chip and technology shares in Asia climbed in the wake of earnings from major U.S. companies that eased investor concerns over the viability of huge data-center investments. The U.S. PHLX "SOX" Semiconductor Sector index leaped 8% on Thursday. Amazon.com reported Thursday that cloud-computing sales are quickening, and that its investments in data centers to serve cloud customers are accelerating, a combination that has cheered investors. Microsoft this week reported blockbuster revenue growth at its cloud-computing unit, indicating the potential payoff for AI investments. "Stronger results from a leading e-commerce and cloud service provider after the close [Thursday] reinforced the view that AI-related capital expenditure continues to generate robust demand and attractive returns," Commerzbank Research analysts said in a note, referring to Amazon.com's results. South Korea's Kospi led gains across most of the region, jumping 17%. The Korea Exchange briefly suspended trading in both the main Kospi and the tech-heavy Kosdaq. Chip-making index heavyweights SK Hynix and Samsung Electronics surged 20% and 25%, respectively. Japan's Nikkei Stock Average rose 5.4%. Technology company Furukawa Electric climbed 18% and Advantest, which makes automatic test equipment for the semiconductor industry, also rose 18%. Australia's S&P/ASX 200 benchmark index added 0.5%, while the Shanghai Composite Index rose 0.8%. Hong Kong's Hang Seng Index fell 0.6%. Meanwhile, the yen weakened against the dollar Friday morning following suspected yen-buying intervention by Japanese authorities overnight. Any surprise intervention by the Japanese government to prop up the yen is likely nothing more than a stopgap measure to buy time, said Kenta Tadaide, chief currency strategist at Daiwa Securities. "To maximize the impact of currency intervention, monetary policy must align in the same direction," he said. The Bank of Japan is widely expected to hold its policy rate steady later Friday. The dollar was recently 0.6% higher at 160.52 yen after falling as much as 3.3% to Y157.96 on Thursday, the lowest intraday level since May 14, according to LSEG data. --Megumi Fujikawa contributed to this article

Asian chip stocks slide as China competition fears rattle AI trade

SEOUL, July 28 (Reuters) - Asian semiconductor stocks tumbled on Tuesday, with South Korea leading the regional selloff, as investors questioned lofty valuations amid concerns over AI infrastructure financing and intensifying competition from China. Shares in memory-chip giants Samsung Electronics and SK Hynix plunged as much as 13.4% and 14%, respectively, amplifying the decline in Seoul. Together, they account for nearly half of the benchmark KOSPI index, which was down about 9.4% as of 0341 GMT. Japanese flash memory-chip maker Kioxia Holdings slumped nearly 18%, while Taiwanese chip designer MediaTek fell more than 9% in morning trade. SK Hynix's U.S. shares closed 7.5% lower overnight at $143.02, the first time below their $149 initial public offering price since debuting this month, highlighting how quickly sentiment has turned against one of the biggest beneficiaries of the AI boom. "We seem to be at the despair part of the selloff, where tech investors are rushing for the exit because the Nasdaq says so," said Matt Simpson, a senior analyst at StoneX. "But right now the KOSPI is setting the tone for sentiment in Asia, and it looks ugly." AI SENTIMENT SHIFTS SK Hynix, a key supplier of high-bandwidth memory (HBM) chips to Nvidia, has been one of the biggest beneficiaries of the AI spending boom, making its shares particularly sensitive to shifts in investor sentiment toward the sector. Analysts said the selloff reflected a combination of concerns over AI infrastructure financing, China's technological advances and rising competition from Chinese firms. Han Ji-young, an analyst at Kiwoom Securities, said reports that Chinese companies were developing domestic deep ultraviolet (DUV) lithography equipment had reignited concerns that Chinese memory-chip makers could accelerate capacity expansion, intensifying competition in the global memory market. While details such as the companies involved, equipment performance and commercialisation timelines had yet to be disclosed, the news had cooled investor sentiment as the investment narrative for semiconductor stocks had already weakened, he said. Han added that investors were becoming increasingly cautious ahead of a string of earnings reports due later this week. "Despite stronger-than-expected earnings from Samsung Electronics earlier this month and Alphabet last week, semiconductor shares experienced sharp declines after the results," he said. Separately, a Wall Street Journal report that Nvidia could provide a roughly $250 billion financial backstop for an OpenAI data-centre project sent Nvidia shares down nearly 5%, with investors questioning the extent to which the AI chip leader may be financing its own customers. Further weighing on sentiment, the growing popularity of low-cost Chinese open-source AI models such as Kimi K3 raised questions about whether future AI workloads could prove less intensive than previously expected -- meaning less demand for advanced AI chips and HBM. CXMT IPO COULD INTENSIFY COMPETITION Chinese memory-chip maker CXMT's strong stock-market debut on Monday added to concerns about intensifying competition in the global memory industry. "CXMT is going to be one of the big index weights. As that's going on, people have to dump more of their existing stocks," said Hao Hong, managing partner and chief investment officer at Lotus Asset Management in Hong Kong. The listing also reinforced concerns that CXMT could emerge as a more formidable memory supplier, increasing the risk of oversupply and weaker pricing, said Ryu Young-ho, a senior analyst at NH Investment & Securities. The CXMT listing came after reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some of its products, further unsettling investors already concerned about China's growing technological capabilities. (Reporting by Heekyong Yang in Seoul; Additional reporting by Ankur Banerjee and Gregor Stuart Hunter in Singapore; Editing by Kevin Buckland and Jamie Freed)

Asian Equities Slide on Growing Doubts Over AI Spending

Asian equities slid Tuesday morning, with Korean markets leading losses amid growing worries over spending linked to the artificial-intelligence boom. Chip and technology stocks dragged stock markets lower across Asia after the U.S. Philadelphia Semiconductor Index fell 2.2% on Monday, extending a selloff into a third straight session and taking the index's cumulative loss over the period to more than 7%. "Sentiment toward the semiconductor sector was also hit by a report that a Chinese state-backed company had begun mass-producing deep ultraviolet lithography chip-making equipment, potentially increasing competition with foreign suppliers," Commerzbank Research analysts said in a note. Technology news publication The Information reported that a Shanghai-based company had started making a homegrown version of machines that are used in chip manufacturing. South Korea's Kospi led declines across the region, falling 7.7%, with chip-making index heavyweights SK Hynix slumping 11% and Samsung Electronics dropping 8.7%. Korea Exchange briefly suspended trading in both the main Kospi index and the tech-heavy Kosdaq. Japan's Nikkei Stock Average declined 3.8%, with memory-chip manufacturer Kioxia Holdings sliding 15% and semiconductor manufacturing equipment maker Kokusai Electric falling 12%. Singapore's FTSE Straits Times Index shed 0.5%, Malaysia's FTSE Bursa Malaysia KLCI lost 0.3% and China's Shanghai Composite Index was down 0.9%. Meanwhile, Hong Kong's Hang Seng Index rose 0.4%. "Investors remain concerned about the scale of AI-related spending and whether the rapid increase in [capital expenditure] would translate into sufficient returns," the Commerzbank analysts said. Meanwhile, crude oil futures fell Tuesday as the pause in the U.S.-Iran conflict continued. President Trump told reporters aboard Air Force One on Monday that there was a "good chance that something good could happen" with Iran. Trump had paused a major escalation in the military campaign against Iran amid efforts to revive diplomacy to open the Strait of Hormuz and a debate over the impact of declining munitions stocks, The Wall Street Journal reported. "The resumption of oil exports out of the Caspian Pipeline Consortium terminal on Monday after being closed last week, added another point of relief for oil markets," said John Oh, sustainable and energy economist at Commonwealth Bank of Australia, in a note. Front-month West Texas Intermediate crude oil futures fell 0.9% to $81.84 per barrel and front-month Brent crude oil futures dropped 0.7% to $87.76 a barrel, ICE data showed.