South Korean stocks, particularly those of its dominant tech giants, experienced a sharp decline on Wednesday. The Kospi index tumbled 6%, following a 10.8% plunge the previous day, bringing its year-to-date gain down to 34.4%. This movement was largely driven by investor skepticism surrounding the massive investments in artificial intelligence and unimpressive earnings from key chipmakers.
Shares in SK Hynix sank 9.4%, while Samsung Electronics dropped 4.8%. This rout was primarily triggered by SK Hynix's operating profit for the last quarter failing to meet analysts' forecasts, despite still soaring nearly sixfold. Similarly, Samsung's preliminary earnings, which showed a 19-fold surge in quarterly profits, largely disappointed investors as expectations were already exceptionally high, leading to a "sell on news" reaction.
The widespread selling in AI-related stocks has significantly impacted the South Korean market due to its heavy reliance on these two tech behemoths. Goldman Sachs estimated that 90% of the Kospi's doubling this year was attributable to SK Hynix and Samsung. The latest declines also pushed the benchmark Kospi to its lowest level since early April, after only recently topping 9,000 before its retreat.
