Kospi sinks 4.5% as Korea’s AI winners suddenly become Asia’s biggest risk

South Korean stocks fell sharply on Thursday as investors unwound part of the previous session’s AI-led rebound, leaving the Kospi once again at the centre of Asia’s technology sell-off.

The benchmark dropped 4.5% to about 6,299 by 1.09 pm in Seoul. Samsung Electronics lost 5.8%, while SK Hynix slid 9.4%, reinforcing how quickly shifts in sentiment towards memory chips can move the broader Korean market.

Japan’s Nikkei 225 fell 1.3%, with Kioxia down 9.1% and Tokyo Electron losing 5.2%, while Hong Kong’s Hang Seng declined 1.8%.

Korean chip leaders turn another rebound into a reversal

Thursday’s retreat followed a 3.8% rise in the Kospi on Wednesday, when bargain hunters returned to Samsung and SK Hynix after weeks of violent swings.

That recovery proved fragile as investors again questioned whether record AI infrastructure spending can keep delivering profits fast enough to support elevated valuations.

The two chipmakers together account for roughly half of the Kospi, making the index unusually sensitive to the global memory cycle.

Their weight also means stock-specific selling can quickly become a market-wide event, particularly when leveraged funds and retail positioning amplify the move.

Goldman Sachs strategists remain more constructive than the daily price action suggests.

They argue that the Korean sell-off has priced in a darker earnings outlook than fundamentals justify, citing strong AI demand and memory shortages that could support pricing for longer than in previous cycles.

The bank has nevertheless acknowledged that concerns over capital spending, competition and crowded positioning are legitimate.

Wall Street earnings reset hits Asia’s AI complex

The latest selling followed a weaker close on Wall Street.

The Nasdaq Composite fell 0.8% on Wednesday as investors reacted to results from AMD and SpaceX, two companies closely tied to the market’s AI investment narrative.

AMD reported record quarterly revenue of $11.5 billion and adjusted earnings of $1.66 a share.

However, its shares fell as investors focused on a forecast for adjusted gross margin to remain at 56%, despite expectations for further revenue growth.

The reaction suggested that beating published estimates is no longer enough after the stock’s powerful rally.

SpaceX also came under pressure after investors looked beyond faster revenue growth to the scale of its spending.

Capital expenditure reached about $18.4 billion in the quarter, reviving concerns over how long cash generated by Starlink can support data centres, Starship development and other projects.

Those concerns spread through Asia’s semiconductor complex, where Korean memory producers and Japanese chip-equipment stocks have become proxies for confidence in the durability of AI spending.

Jobs, oil and the yen keep macro risks alive

Investors are also preparing for Friday’s US payrolls report after ADP said private employers added only 44,000 jobs in July, down from a revised 95,000 in June.

The slowdown has slightly reduced expectations for a Federal Reserve rate rise in September, although futures markets still indicate that the decision remains finely balanced.

Oil traded near $79 a barrel for Brent and $75 for West Texas Intermediate as markets assessed talks involving Iran and Oman over the Strait of Hormuz.

Commonwealth Bank analyst Madison Cartwright expects an agreement could emerge by early September, but believes Iran still has leverage to seek further concessions.

The dollar was little changed near 157.7 yen after last week’s rare joint intervention by Japan and the US.

For the KOSPI, however, the immediate signal remained the same: until investors gain more confidence in the profitability of AI spending, rebounds in Korea’s chip-heavy market are likely to remain vulnerable to abrupt reversals.