South Korea’s KOSPI index nosedived 8.3% on June 8, closing at 7,484.41 and triggering circuit breakers shortly after the opening bell.
Just six days earlier, the KOSPI had been sitting at 8,801.49. That means roughly 15% of its value evaporated in less than a week. The index had gained approximately 166% over the preceding year, riding a wave of AI enthusiasm and semiconductor demand.
What’s driving the sell-off
Three forces converged to create this particular mess. First, robust US jobs data raised expectations that the Federal Reserve will pursue additional rate hikes. Second, there’s a significant unwinding of AI-related investment positions happening globally. The KOSPI had been one of the primary beneficiaries of the AI trade, with semiconductor giants like Samsung Electronics and SK Hynix acting as proxies for AI infrastructure spending. Third, escalating geopolitical tensions between Iran and Israel are adding a layer of risk-off sentiment.
Samsung Electronics shares dropped 10.2% on the day. SK Hynix, which has become one of the world’s most important suppliers of high-bandwidth memory chips for AI applications, fell 7.7%.
