Kospi Drops More Than 40% From Record High, Hits Lowest Level in 2 1/2 Months

The Kospi slumped more than 7% in intraday trading on Oct. 15, falling into the 5,500 range. That left South Korea’s benchmark stock index more than 40% below its record high set in June. A US inflation surprise and mounting anxiety over AI investment battered heavyweight chip stocks, dragging the gauge to its lowest level in about 2 1/2 months.

As of 10:16 a.m., the Kospi was down 431.69 points, or 7.18%, from the previous session at 5,577.12. It opened at 5,673.01 and fell as low as 5,570.75 during the session.

Compared with its intraday peak of 9,385.59 on June 19, the index has dropped 3,808.47 points, or 40.58%. It was the first time since July 30 that the Kospi had fallen to that level during trading. The intraday low that day was 5,547.41. The rebound after the summer selloff has now evaporated, returning the index to late-July levels.

The sharp decline triggered a series of sell sidecars in both markets. In the main Kospi market, program sell orders were suspended for five minutes from 9:07 a.m. The same curb took effect in the Kosdaq market at 9:12 a.m. As of 10 a.m., the Kosdaq index was also down 59.87 points, or 7.27%, at 764.01.

Samsung Electronics Co. and SK Hynix Inc., the two pillars of the domestic stock market, deepened their losses. At about 10:10 a.m., Samsung Electronics was trading at 212,500 won ($154), down 19,500 won, or 8.41%. SK Hynix was down 153,000 won, or 10.78%, at 1,266,000 won ($918). Because both companies carry heavy weights in the index, their simultaneous slide added to the broader market’s downside pressure.

The first catalyst for the selloff was US inflation data. The September consumer price index released on Oct. 14 rose 3.7% from a year earlier, above the market forecast of 3.6%. Core CPI also came in hotter than expected at 2.6%. That heightened concern about further interest-rate increases and weakened risk appetite for technology stocks and other risky assets.

Anxiety over the funding needed to support AI investment added to the pressure. CoreWeave, a US AI cloud company, plunged 15.46% in a single day as concerns over its debt burden intensified. After its corporate bond yield rose above 15%, investors grew more worried that its business model could come under strain. The company borrows to secure equipment and data centers, then repays that debt with fees collected from customers.

That also weighs on growth expectations for Samsung Electronics and SK Hynix. If AI companies struggle to raise funds and delay data-center investment, growth in orders for high-bandwidth memory, server DRAM and storage devices could also slow. In effect, financial strain at US AI infrastructure companies is feeding doubts about future demand for South Korea’s memory makers.

Market attention is also shifting from the scale of investment to profitability. Han Ji-young, an analyst at Kiwoom Securities, said the market is now judging the AI investment cycle less by the pace of capital spending and more by returns on invested capital and the stability of funding.