Seoul Stock Market Plunges, AI-Linked Sell-Off Hits Retail Investors

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The Seoul stock market extended its previous day's sharp decline, with the KOSPI index briefly falling 12.6 percent before closing down 5.98 percent at 5,663.24. Following a roughly 11 percent plunge the day before, the index is on track for its biggest monthly drop on record, having lost nearly 40 percent from its high about a month ago. A notable flight from semiconductor stocks that had been bought on AI investment amplified the decline, as forced unwinding of leveraged positions by retail investors who had expanded exposure through margin trading intensified the sell-off. Finance Minister Koo Yun-cheol apologized for insufficient consideration of introducing leveraged ETFs on individual stocks and said the government is reviewing market stabilization measures. SK Hynix reported strong earnings with net profit surging sixfold, but the results fell short of lofty market expectations, and its shares ended 9.6 percent lower, while Samsung Electronics closed down 5.2 percent. The Sydney stock market rose, with the S&P/ASX index gaining 1.01 percent to 9,038.600, a roughly five-month high, led by mining giant Rio Tinto and biopharmaceutical company CSL. Easing inflation in the April-June quarter consumer price index reduced concerns about further rate hikes, boosting risk appetite.