Key takeaways
- Kospi crashes 6% after emergency trading suspension
- Samsung and SK Hynix lead semiconductor losses
- Foreign investors accelerate selling amid AI uncertainty
South Korea's stock market plunged on November 6, with the Kospi index falling as much as 8.8% before triggering an emergency trading halt, as fears surrounding artificial intelligence spending spread from Wall Street to Asia.
According to Reuters, the benchmark recovered some losses to close down 6.02% at 5,059.69, its lowest closing level since March. The index declined 11.7% for the week.
The selloff followed a sharp correction in US technology stocks, with investors increasingly questioning whether enormous AI infrastructure investments can sustain earlier growth expectations.
Kospi Triggers 20-Minute Circuit Breaker as Chip Stocks Collapse
The Korea Exchange activated its first-stage circuit breaker at approximately 9:03 a.m. local time after the Kospi dropped more than 8% shortly after opening.
The mechanism suspended trading for 20 minutes, giving investors time to reassess orders during an unusually volatile session.
The benchmark briefly reached 4,911.28 before recovering above the psychologically important 5,000-point threshold.
Samsung Electronics closed 6.35% lower, while SK Hynix plunged 10.44%, reflecting the country's substantial exposure to semiconductor manufacturing.
Both companies supply critical components used in advanced computing systems, making their valuations sensitive to changes in expected AI demand.
The decline followed an earlier AMD and Nvidia stock selloff, when investors punished semiconductor companies despite strong revenue growth.
Foreign investors sold approximately 2.77 trillion won in South Korean shares on Friday, while domestic institutions purchased roughly 1.70 trillion won.
Retail investors also bought around 605 billion won, helping reduce losses before the close.
Why US AI Spending Concerns Hit South Korea
The selloff followed Democratic gains in the US midterm elections, which increased expectations of tighter oversight of AI infrastructure and data center construction.
Investors are concerned that slower construction could reduce future orders for memory chips and advanced computing components.
However, restrictions could also benefit companies that already operate significant infrastructure, as Coinpaper explained in its analysis of AI data center scarcity.
South Korean manufacturers face a different challenge because much of their growth depends on supplying hardware to those facilities.
The latest volatility also reflects a broader decline in semiconductor valuation multiples, even as chipmakers continue reporting substantial demand.
Additional uncertainty surrounds Nvidia's access to Chinese AI customers, adding another risk for semiconductor supply chains.
South Korean Government Responds to Market Volatility
South Korean Finance Minister Lee Hyoung-il convened an emergency meeting as authorities assessed the market disruption.
Regulators temporarily relaxed margin-loan collateral requirements for three months to reduce the risk of forced selling.
The measures followed two consecutive sessions of severe losses, including Thursday's 5.28% Kospi decline.
Meanwhile, concerns about AI financing have intensified after Microsoft withdrew from a major UK data center project, highlighting the difficulties facing infrastructure developers.