Kospi Slides More Than 3% on AI Investment Fears, Middle East Risks; Foreigners Sell 1.56 Trillion Won

South Korean stocks fell sharply on Oct. 12 as concerns over profitability in the artificial intelligence industry and rising military tensions in the Middle East weighed on sentiment.

As of 2 p.m., the Kospi had dropped 3.17% from the previous session to 6,415.94. The benchmark index has declined for four straight trading days since Oct. 6. The Kosdaq also fell 4.17% to 855.03 at the same time, extending its losses.

The market weakness was driven in part by earnings concerns surrounding the US AI industry. Caution over expanding AI investment intensified after reports that OpenAI's annualized revenue was below the level previously known to the market. OpenAI told investors on Oct. 8 that its annualized revenue as of the end of September was about $50 billion, roughly 29% less than the previously reported $70 billion.

Geopolitical uncertainty in the Middle East also hurt investor sentiment. Casualties were reported after Yemen's Houthi rebels attacked Saudi Arabia, and Americans were said to be among the victims, raising the possibility of US military involvement. Asked whether the US could join a Saudi attack on the Houthis, President Donald Trump said, "Maybe. We'll take a look."

Heavy foreign selling added to the index decline. As of 1 p.m., foreigners were net sellers of 1.56 trillion won on the Kospi market. Individuals were net buyers of 1.09 trillion won, while institutions posted net purchases of 23 billion won.

Large-cap semiconductor stocks also traded lower across the board. Samsung Electronics and SK Hynix fell 3.24% and 3.63%, respectively, while Samsung Electronics preferred shares and SK Square lost 1.6% and 4.67%. Uncertainty over earnings at AI-related companies and risk-off sentiment stemming from the Middle East combined to widen selling pressure across the South Korean stock market.