Kospi Plunges 6% After 8.8% Intraday Drop Triggers Trading Halt

Key takeaways - Kospi closes down 6% after an emergency trading suspension - Samsung Electronics and SK Hynix lead semiconductor losses - Foreign investors accelerate selling amid AI spending uncertainty South Korean stocks tumbled on November 6, with the Kospi falling as much as 8.8% before an emergency trading halt, as concerns over artificial intelligence spending spread from Wall Street to Asia. Reuters reported that the benchmark recovered part of the loss to close down 6.02% at 5,059.69, its lowest close since March. The index lost 11.7% for the week. The selloff followed a sharp correction in US technology stocks. Investors are increasingly questioning whether massive AI infrastructure investments can support earlier growth expectations. Chip Stocks Trigger 20-Minute Circuit Breaker The Korea Exchange activated its first-stage circuit breaker at about 9:03 a.m. local time after the Kospi dropped more than 8% shortly after the open. Trading was suspended for 20 minutes, giving investors time to reassess orders during an unusually volatile session. The benchmark briefly touched 4,911.28 before recovering above the 5,000-point threshold. Samsung Electronics closed 6.35% lower. SK Hynix plunged 10.44%, reflecting heavy South Korean exposure to semiconductor manufacturing. Both companies supply critical components for advanced computing systems, leaving their valuations sensitive to changes in expected AI demand. The decline followed an earlier selloff in AMD and Nvidia shares, when investors punished chip companies despite strong revenue growth. Foreign investors sold about 2.77 trillion won in South Korean shares on Friday. Domestic institutions bought roughly 1.70 trillion won. Retail investors bought around 605 billion won, helping to reduce losses before the close. Why US AI Spending Concerns Hit Korea The selloff followed Democratic gains in the US midterm elections, which raised expectations of tighter oversight of AI infrastructure and data center construction. Investors worry that slower construction could reduce future orders for memory chips and advanced computing components. Restrictions could also benefit companies that already operate significant infrastructure, according to a Coinpaper analysis of AI data center scarcity. South Korean manufacturers face a different challenge: much of their growth depends on supplying hardware to those facilities. The latest volatility also reflects a broader decline in semiconductor valuation multiples, even as chipmakers continue to report substantial demand. Additional uncertainty surrounds Nvidia and its access to Chinese AI customers, adding another risk for semiconductor supply chains. South Korean Government Responds to Market Volatility Finance Minister Lee Hyoungil convened an emergency meeting as authorities assessed the market disruption. Regulators temporarily relaxed margin-loan collateral requirements for three months to reduce the risk of forced selling. The measures followed two consecutive sessions of severe losses, including a 5.28% Kospi decline on Thursday. Concerns about AI financing have intensified after Microsoft withdrew from a major UK data center project, highlighting the difficulties facing infrastructure developers.