KOSPI Steadies Near Flat After Monday's Steep Plunge as Bargain Hunters Offset Renewed Chip Stock Weakness

SEOUL — South Korea's benchmark KOSPI index edged higher by midday Tuesday, adding 3.71 points, or 0.056%, to trade at 6,688.08, clawing back from a weak open as domestic bargain hunters stepped in to offset renewed selling pressure on the index's dominant chipmakers.

The steadier tone followed a bruising session Monday, when the KOSPI tumbled 3.26%, or 225.54 points, to close at 6,684.37, one of the index's sharpest single-day declines this year. That selloff was driven by aggressive selling from foreign investors, who posted net sales of roughly 3.3 trillion won, alongside sharp declines in the country's two largest chipmakers, Samsung Electronics and SK Hynix, which fell 3.44% and 2.21%, respectively. Panicked liquidation of local futures positions further amplified the decline as the session wore on.

Tuesday's session opened on a similarly weak note, with the KOSPI falling 25.12 points, or 0.38%, to open at 6,659.25, before buying interest gradually pulled the index back into positive territory by midday. Domestic retail investors provided much of that support, with net buying in beaten-down stocks exceeding 340 billion won in early trading, according to market analysts, helping cushion the index against a deeper slide even as some of the underlying pressures from Monday's rout remained in place.

Those underlying pressures trace back to a broader reassessment of artificial intelligence spending that has rattled technology and chip stocks globally over the past two sessions. Renewed concern about the pace of AI development followed a widely discussed essay from a leading AI company executive over the weekend calling for the industry to slow its rate of capability advancement, a call that drew public support from several rival AI executives and fed into broader questions among investors about whether the enormous capital expenditure underpinning the global AI buildout can continue to be justified by near-term returns.

South Korea's chip-heavy market has proven particularly sensitive to that debate, given how central Samsung Electronics and SK Hynix are to the country's export economy and to the KOSPI index itself, where the two companies together account for roughly half of the benchmark's total market capitalization. Tuesday's trading showed a notable divergence from Japan, where the Nikkei 225 rebounded 0.35%, led by gains of nearly 5% in SoftBank Group and further strength in Kioxia, even as Samsung Electronics and SK Hynix continued to extend their losses in Seoul trading.

Compounding the pressure on Asian markets, Brent crude oil prices climbed above $105 a barrel, adding to inflation concerns just as investors brace for a busy stretch of central bank decisions, with the U.S. Federal Reserve, Bank of Japan and Bank of England all due to announce policy decisions in the coming days. Rising energy costs pose a particular challenge for export-dependent economies like South Korea, which imports the vast majority of its energy needs and remains highly exposed to swings in global oil prices.

South Korea's own central bank has signaled it is monitoring inflation closely as it weighs the path for interest rates. The Bank of Korea has indicated it will assess the timing and pace of any further rate increases after consumer price inflation accelerated to 3.1% in August, above the central bank's target, adding another layer of uncertainty for investors already grappling with the fallout from the AI-related selloff and rising global oil prices.

Not all of the recent news out of South Korea's technology sector has been negative. Samsung Electronics unveiled its next-generation HBM4 memory chip on Monday, a product the company is positioning to strengthen its position in the global market for AI accelerator memory. Separately, brokerage KB Securities issued a note suggesting Samsung could reclaim the top spot in the global memory chip market next year, with SK Hynix projected to rank third, offering a longer-term bullish counterpoint to the sector's recent short-term volatility.

The broader trade data out of South Korea has also remained robust despite the stock market turbulence. The country's exports surged 83% year-over-year during the first ten days of September, according to preliminary trade figures, with semiconductor shipments alone jumping 270% amid continued strong global demand tied to AI infrastructure investment, a reminder that the underlying demand picture for Korean chipmakers has remained strong even as investor sentiment toward AI-linked equities has grown more volatile in recent sessions.

Elsewhere in South Korean corporate news, automaker Hyundai and steelmaker POSCO broke ground on a $5.8 billion steel mill in the United States on Monday, part of a broader wave of South Korean corporate investment in U.S. manufacturing capacity that has continued even amid the recent volatility in domestic equity markets.

The KOSPI has experienced an unusually volatile year overall, with the index's 52-week trading range spanning from roughly 6,158 to a record intraday high above 9,385 reached in June, according to data from Investing.com, reflecting a dramatic swing between a historic rally earlier in the year and the sharper pullbacks that have characterized trading in recent weeks.

With central bank decisions from the Fed, Bank of Japan and Bank of England all still ahead this week, and the broader debate over AI infrastructure spending continuing to reverberate through global markets, investors in Seoul are likely to remain focused on whether Tuesday's modest recovery can be sustained, or whether it represents only a brief pause within a more sustained period of volatility for South Korea's chip-dependent stock market.