South Korean stocks slide almost 3% as AI worries weigh on chip shares

what happened

Shares in South Korea dropped sharply on Tuesday, with the KOSPI index losing 2.96% to 5,597.38 in early trade, according to Reuters. The index had posted two straight gains after bouncing from a recent six-month low. Chip stocks led the decline on doubts about the financing risks behind AI investment.

Samsung Electronics slipped 1.61% and SK Hynix shed 4.62%. Foreign investors were net sellers worth 480 billion won, about $361 million. The won firmed 0.40% against the dollar to 1,327.8 on the onshore market.

Global sentiment also soured after French bonds, stocks and the euro fell on Monday amid nationwide protests that highlighted the government's struggle to trim its large budget deficit. Mirae Asset Securities analyst Seo Sang-young said the rebound may not be sustainable given financial strains in Europe and rising bond yields.

why it matters

The move shows how sensitive Korea's chip sector remains to concerns about AI funding, while Europe's fiscal stress adds to caution across global markets. Yields on Korea's 10-year bond rose 6.6 basis points to 4.220%, pointing to pressure in the local debt market as well.

market impact

Korean stocks and chipmakers: pressure from AI investment doubts; the won and local bonds hit by broader risk-off

tags

instruments