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(Bloomberg) — South Korean stocks slumped as tech-heavy selloffs resumed on mounting concerns over stretched AI-related valuations.
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The Kospi index fell as much as 4.2% on Friday, taking its slide from a Nov. 3 peak to 8%. Tech heavyweights bore the brunt of the selling, with Samsung Electronics Co. and SK Hynix Inc. sinking as much as 5.2% and 10%, respectively, according to Korea Exchange prices. Japan’s Nikkei 225 index also fell more than 2%.
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The declines follow a sharp reversal on Wall Street, where an Nvidia Corp.-led rebound quickly fizzled and investors fled from risk assets, including cryptocurrencies. Persistent doubts over whether AI spending will generate sufficient returns continue to spur volatility across the region’s markets. Uncertainty over the Federal Reserve’s policy path added to uncertainties.
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On Thursday, US equity benchmarks sank to their lowest levels in more than two months. Nvidia slid 3.2% despite its upbeat earnings forecast.
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Read: Wall Street Stunned as Reversal in S&P 500 Erases $2.7 Trillion
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“With worries mounting that the AI rally has become over-extended, tech names are getting hit,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “This is rather a risk-off rotation, not a fundamental collapse. So depending on what the Fed signals in coming weeks, there’s room for flows to stabilize — or even reverse.”
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Fueled by the global AI boom and supportive domestic policies, Korea’s equity benchmark surged over 60% this year, outpacing all major global stock gauges. Now, as Asia’s poster child for AI play, with exposure spanning semiconductors, power equipment, and even nuclear energy, the index is taking the sharpest hit.
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