South Korean stocks fell sharply on Thursday, with the Korea Composite Stock Price Index (KOSPI) closing down 5.28% at 5,383.80 points, marking its lowest level since April 3.
Chip stocks came under concentrated selling pressure, while defense-related shares weakened in tandem, as market risk appetite cooled markedly.
The semiconductor sector was the main drag on the South Korean market. Heavyweight stocks such as Samsung Electronics and SK Hynix fell sharply, and semiconductor equipment and electronic components shares also came under broad pressure. Media reports noted that the market is concerned that the outcome of the U.S. midterm elections could lead to tighter regulation of artificial intelligence data centers, which would in turn affect the outlook for AI infrastructure investment.
Although major U.S. stock indices rose overnight, the Philadelphia Semiconductor Index declined, weighing on South Korean chip stocks. Foreign selling further exacerbated the market's decline. South Korean stocks continued to slide after the open that day, with program selling pressure mounting, and both the KOSPI and the Korea Securities Dealers Automated Quotations (KOSDAQ) triggered temporary sell-side trading halts.
During intraday trading, losses in Samsung Electronics and SK Hynix widened significantly at one point, reflecting investor concerns about the near-term outlook for the semiconductor and AI supply chains.
Defense stocks also performed weakly. Expectations regarding future U.S. defense spending and possible changes in the Middle East situation affected the performance of related sectors, with defense companies such as Hanwha Aerospace, Hanwha Systems, and LIG Defense & Aerospace seeing their share prices fall.
Overall, the day's adjustment in the South Korean stock market reflected a reassessment by the market of the outlook for AI investment and related policy changes. Because large semiconductor companies such as Samsung Electronics and SK Hynix carry high weighting in the South Korean stock market, the concentrated decline in chip stocks exerted a clear drag on the index. Future market performance will continue to be influenced by factors such as U.S. AI regulatory policy, global semiconductor stock trends, and foreign capital flows.
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