South Korea's benchmark Korea Composite Stock Price Index (KOSPI) plunged 4.58 per cent, or 301.88 points, to close at 6,296.38 on Thursday, 6 August, as persistent doubts over the profitability of large-scale artificial intelligence (AI) infrastructure spending triggered a broad sell-off in technology shares. The index touched an intraday low of 6,238.32 before recovering slightly. The Korean won edged higher against the US dollar, quoted at 1,423.8 won as of 3:30 pm local time.

Circuit Breaker Triggered as Losses Deepen

After opening 1.81 per cent lower, the KOSPI extended its slide rapidly, prompting the bourse operator to activate a sell-side sidecar for five minutes at 10:18 am, temporarily halting programme trading for KOSPI-listed shares. Trade volume was relatively light at 281.8 million shares worth 25.9 trillion won (approximately $18.2 billion). Foreigners were the dominant sellers, offloading a net 3.33 trillion won worth of stocks, while institutions sold a net 121.8 billion won. Retail investors stepped in as buyers, purchasing a net 3.34 trillion won.

Semiconductor Stocks Bear the Brunt

Semiconductor shares suffered the steepest losses. Samsung Electronics tumbled 6.3 per cent to 203,500 won, while memory chipmaker SK hynix plunged 10.37 per cent to 1.5 million won. SK Square, the parent company of SK hynix, nosedived 13.32 per cent to 970,000 won, and Samsung Electro-Mechanics slumped 9.37 per cent to 1.23 million won. Shipbuilders also weakened, with HD Hyundai Heavy Industries declining 0.39 per cent to 507,000 won and Hanwha Ocean falling 1.31 per cent to 90,700 won. Retail and financial names were not spared: Hyundai Department Store sank 3.36 per cent to 106,400 won and Samsung Securities dropped 2.25 per cent to 95,400 won.

Wall Street Sell-Off Sets the Tone

Overnight on Wall Street, investors sold off Nasdaq-listed heavyweights including Alphabet and Advanced Micro Devices (AMD), pushing the tech-heavy Nasdaq down 0.83 per cent on scepticism about the return on massive AI infrastructure investment. The contagion spread swiftly to Seoul given South Korea's deep exposure to the global semiconductor supply chain. Notably, the KOSPI had gained 1.62 per cent and 3.76 per cent on Tuesday and Wednesday respectively, driven by a brief easing of AI profitability concerns — gains that Thursday's session largely reversed.

Analyst Take: Peak Fear or Persistent Headwind?

Han Ji-young, an analyst at Kiwoom Securities, attributed the reversal to losses in US chip stocks and profit-taking. 'Despite improvement in geopolitical and macroeconomic conditions, the KOSPI lost momentum due to losses in U.S. chip stocks and profit-taking,' Han said, adding that 'investors still want to see strong evidence of massive AI spending and growth.' However, Han struck a cautiously optimistic note: 'Investors' concerns over AI spending seemed to have already peaked following recent earnings reports by big tech companies.' Not all sectors closed in the red. Hanwha Aerospace rose 4.67 per cent to 1.05 million won, buoyed by eased Middle East tensions that also lifted the Dow Jones Industrial Average by 0.49 per cent to a new record high. Samsung Biologics gained 1.54 per cent to 1.51 million won.

What to Watch Next

With winners outnumbering losers 489 to 380 despite the index-level carnage, the breadth picture was less dire than headline numbers suggest. Markets will now focus on upcoming earnings disclosures from major US and Asian chipmakers, as well as any signals from the US Federal Reserve on the pace of rate adjustments. Any concrete evidence of AI-driven revenue growth from big tech could help stabilise sentiment in Seoul's semiconductor-heavy index.