South Korea Kospi drops 41% from peak as AI tech rally fades

Global tech sell-off hits Seoul

South Korea’s benchmark Kospi index has fallen more than 41 per cent from its June peak of 9,386 points, reversing a massive rally driven by artificial intelligence speculation earlier in the year. The benchmark, which opened down a further 2.36 per cent at 5,403.17 on Friday morning, has suffered as investors retreat from heavily concentrated technology holdings.

The collapse follows steep overnight losses in United States technology stocks, where concerns over massive capital expenditure and delayed returns on artificial intelligence investments triggered a broad market retreat. Major chipmakers such as Micron Technology, Intel, and Nvidia suffered sharp declines, while scaled-back spending plans from companies including Tesla and Meta Platforms added to global tech anxiety.

South Korea’s stock market had soared over 122 per cent earlier in the year to reach record highs in June. However, its high concentration in semiconductor giants Samsung Electronics and SK Hynix — which together account for more than half of the Kospi's total weight — left the index uniquely vulnerable when global sentiment shifted. The growth of single-stock leveraged funds linked to the two tech giants further accelerated the downward spiral.

India's structural stability shines amid market turbulence

While chip-centric East Asian markets grapple with tech volatility, India’s equity markets have demonstrated remarkable resilience. Unlike the Kospi’s reliance on two massive semiconductor producers, India’s benchmark indices are balanced across roughly 13 distinct sectors, shielding the economy from targeted sector downturns.

During a recent period of global volatility between October 6 and October 14, the Kospi plummeted 13.5 per cent, whereas India's Nifty index slipped by less than 1 per cent.

This stability is bolstered by strong domestic macroeconomic fundamentals and consistent buying from domestic institutional investors, who have steadily absorbed foreign portfolio outflows. Analysts at Angel One noted that global capital allocators actively pay a premium for market stability, positioning India as a prime destination for portfolio rotation as global investors move away from over-leveraged tech bets.

Market strategists at SBI Securities pointed out that a broader risk-off mood surrounding artificial intelligence equities is likely to direct international flows toward well-diversified markets like India. Supported by sustained domestic demand, infrastructure delivery, and stable governance, Dalal Street offers long-term growth prospects that contrast sharply with the volatile, single-sector dependencies seen elsewhere in Asia.