Global AI Tech Rout Triggers South Korean Market Crash
Asian and U.S. stock markets plunged Thursday as high U.S. inflation and doubts over AI spending sustainability triggered circuit breakers in South Korea.
A global sell-off of artificial intelligence and semiconductor stocks caused severe market declines on Thursday, led by a crash in South Korea. The Korea Composite Stock Price Index (KOSPI) plunged approximately 8%, triggering simultaneous circuit breakers and sell-sidecars for the first time since July. Major chipmakers Samsung Electronics and SK Hynix saw steep losses of up to 11% and 12% respectively, pushing SK Hynix's market capitalization below 1,000 trillion won.
The rout was sparked by U.S. consumer price index data showing a 3.7% year-on-year increase for September, exceeding forecasts. This inflation, driven partly by energy shocks from the Iran war and the choking of the Strait of Hormuz, revived expectations that the Federal Reserve will implement further interest rate hikes. Investors also grew skeptical of AI profitability following a pessimistic Gartner report and slowing revenue growth at Anthropic, while distressed bonds at CoreWeave raised fears of a credit event.
Other Asian markets suffered significant losses, with Japan's Nikkei 225 tumbling 4.9% and Taiwan's Taiex dropping 3.32%. Despite the volatility, TSMC reported record quarterly profits and maintained that AI demand remains strong. In response to the turmoil, South Korea's Financial Services Commission convened an emergency meeting to assess risks and reinforce investor protection. The sell-off extended to Wall Street, where Nasdaq futures fell as investors shifted toward safe-haven assets like gold and U.S. Treasuries.
