South Korea's KOSPI has tumbled more than 20% from its June record, becoming the first major Asian index to enter a bear market as a rout in memory-chip stocks deepens.
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KOSPI enters bear market with 20% drop as chip selloff deepens
South Korea's KOSPI has tumbled more than 20% from its June record, becoming the first major Asian index to enter a bear market as a rout in memory-chip stocks deepens.
The KOSPI plunged as much as 5.7% on July 8, closing in bear market territory after a selloff in Samsung Electronics and SK Hynix erased months of AI-fueled gains. The index has now declined more than 20% from its record high of roughly 9,385 points set on June 19.
The selloff was concentrated in the two companies that dominate the KOSPI. Samsung Electronics and SK Hynix each fell 6% to 7% on July 8, dragging the broader index lower. Together, the two chipmakers account for nearly half of the KOSPI's total market capitalization, making the index's fortunes almost entirely dependent on AI demand trajectories. Samsung had just reported a 19-fold increase in quarterly profit — a result that would typically trigger buying, not a single-day decline of 6%.
The divergence between earnings and price action shows investors are looking past current results and focusing on the risk that memory chip production could tip into oversupply as hyperscaler capital expenditure growth plateaus. The KOSPI had more than doubled over a six-month span leading into its June peak, fueled by surging global demand for AI technologies and the high-bandwidth memory chips that power them.
South Korea's $880 billion national investment plan in chips and AI, announced in late June, ties the country's economic trajectory directly to semiconductor demand. A sustained decline in the KOSPI would signal that the global AI spending cycle — the primary engine of the index's rally — is losing momentum. Traders are watching whether the KOSPI stabilizes in the coming sessions or continues its descent; a bounce would suggest profit-taking, while further declines would indicate a more fundamental reassessment of the AI trade.
The selloff has also rippled into crypto markets, where South Korea remains one of the world's most active trading hubs. AI-linked tokens and blockchain infrastructure projects have attracted significant capital this year, and a broader reassessment of AI growth trajectories could pressure those assets alongside traditional equities. The KOSPI's prior periods of turmoil have been linked to volatility in Bitcoin and broader digital asset volumes, making the index's direction a potential leading indicator for crypto sentiment.
This article is for informational purposes only and does not constitute investment advice.
[1] SK Hynix, Samsung Drag KOSPI Into Bear Market as Memory-Chip Selloff Deepens[2] South Korea enters bear market as AI chip fears trigger massive sell-off[3] South Korea's Kospi enters bear market, plunges 20% from peak. What's spooking investors?[4] Kospi enters bear market! What South Korea’s finance minister said after 20% crash[5] MU, SNDK, WDC Stocks Fall Premarket: Samsung, SK Hynix Briefly Drag South Korea's Kospi Into Brief Bear
