Kospi tumbles over 2% despite rebound in US chip stocks

South Korean stocks tumbled more than 2 percent in early trading Tuesday even as AI and semiconductor shares rebounded on Wall Street overnight.

Analysts attributed the sharp decline to anxiety in global financial markets over unrest in France and a surge in US Treasury yields, which together kept investor sentiment from recovering. Foreign and institutional investors sold in tandem, dragging down large-cap names including Samsung Electronics and SK hynix.

According to Korea Exchange, the Kospi opened down 34.44 points, or 0.60 percent, at 5,733.57 and extended its losses through the early session. Foreign investors led net selling of 190 billion won ($143 million) while institutions posted net selling of 180 billion won, leaving retail investors as the sole buyers with net purchases of 306 billion won.

Although AI and chip stocks rose on Wall Street overnight, investor sentiment has yet to fully recover amid the unrest in France and rising US Treasury yields.

The Dow Jones Industrial Average slipped 0.07 percent, while the S&P 500 gained 0.41 percent and the NASDAQ Composite rose 1.11 percent. The Philadelphia Semiconductor Index climbed 1.61 percent, snapping a nine-session losing streak, lifted by gains in Micron (up 2.97 percent), SK hynix's American depositary receipts (up 4.67 percent) and Nvidia (up 1.38 percent).

Interest rates remain elevated, however. The yield on the 10-year US Treasury note rose 6.69 basis points to 5.1397 percent, while the 30-year yield climbed 4.64 basis points to 5.4673 percent. A wait-and-see mood ahead of earnings reports from major companies including Meta, Tesla and SpaceX — due from the middle of this week — also appears to be weighing on the market.

One bright spot was the market's relatively upbeat assessment of the financial health of CoreWeave, the US neo-cloud provider whose fiscal position had recently fueled doubts about the profitability of AI infrastructure investment.

According to Bloomberg and other outlets, Goldman Sachs upgraded its rating on CoreWeave from neutral to buy, while JPMorgan analysts said in a report that the company's business model remains solid, citing its long-term purchase agreements, and argued that investor concerns over its debt and cash burn are overblown.

Domestic semiconductor stocks are under pressure amid high-rate concerns and a cautious earnings outlook. Samsung Electronics is down around 1 percent and SK hynix has fallen roughly 4 percent. Most other large-cap stocks are also in the red, including SK Square (down 2.95 percent), LG Energy Solution (down 2.43 percent), Samsung Electro-Mechanics (down 2.74 percent), Hyundai Motor (down 1.99 percent), KB Financial Group (down 0.55 percent) and Samsung Life Insurance (down 1.02 percent).

The Kosdaq is also falling. The index opened down 3.52 points, or 0.44 percent, at 805.37 and deepened its losses in line with the Kospi. Retail investors are the only net buyers, picking up 172 billion won, while foreign investors are net sellers of 103 billion won and institutions are net sellers of 68 billion won.

Most top Kosdaq stocks by market cap are also declining, including Alteogen (down 2.30 percent), Ecopro (down 3.10 percent), Ecopro BM (down 4.49 percent), Jusung Engineering (down 2.63 percent), Rainbow Robotics (down 1.46 percent) and HLB (down 1.86 percent).