Kospi plunges 7.6% as AI profitability fears rattle Asian markets

Major Asian stock markets fell in unison Thursday as concerns over the profitability of the artificial intelligence industry resurfaced. South Korea's market suffered steeper losses than Japan and Taiwan, dragged down by a sharp selloff in semiconductor heavyweights Samsung Electronics and SK hynix.

The Kospi closed at 5,554.22, down 454.59 points, or 7.57 percent, from the previous session, according to Korea Exchange and Yonhap Infomax.

Japan's Nikkei 225 fell 4.90 percent to close at 64,425.95, while Taiwan's Taiex dropped 3.41 percent to 46,969.87. China's Shanghai Composite and Shenzhen Composite indexes declined 1.59 percent and 2.43 percent, respectively.

The broad regional selloff was attributed to renewed debate over AI industry profitability, fueled by disappointment over Anthropic's earnings.

"The US consumer price index for September rose 3.7 percent year-on-year, exceeding market expectations," said Kim Rok-ho, an analyst at Hana Securities. "With inflationary pressure coming in higher than anticipated, concerns over additional benchmark interest rate hikes grew, and profit-taking concentrated in AI-related technology stocks dampened investor sentiment across the semiconductor sector."

South Korea's market fell more sharply than other major Asian markets, including Japan and Taiwan, reflecting its heavy dependence on semiconductor giants Samsung Electronics and SK hynix.

Samsung Electronics closed down 9.48 percent at 210,000 won ($157), while SK hynix fell 11.06 percent to 1,262,000 won. SK hynix's market cap dropped below 1,000 trillion won for the first time since late July.

Based on Thursday's closing prices, Samsung Electronics and SK hynix together accounted for 46.92 percent of total Kospi market capitalization. With the two stocks making up nearly half of the Kospi's total market cap, their sharp declines amplified the index's overall losses.

Heavy foreign selling also weighed on the market. Foreign investors posted net selling of 3.63 trillion won on the Kospi. Individual and institutional investors, meanwhile, recorded net purchases of 1.29 trillion won and 1.69 trillion won, respectively.

Foreign investors have offloaded more than 208 trillion won worth of Kospi shares so far this year. Of that total, net selling in SK hynix and Samsung Electronics reached 90 trillion won and 87 trillion won, respectively — accounting for roughly 85 percent of total foreign net selling on the Kospi.