South Korea's stock market posted one of its steepest declines in recent memory on Thursday, with the benchmark index plunging more than 7%. The selloff was broad-based but concentrated heavily in technology and chipmaking shares.
Market data showed major South Korean chipmakers extending their losses, dragging down sentiment across a wide range of other sectors. Analysts attributed the slump to growing doubts about the sustainability of investments tied to artificial intelligence (AI), as questions over the real profitability of the AI boom remain unresolved.
Adding to the pressure, the possibility that the US Federal Reserve will keep raising interest rates weighed on investor sentiment. Higher rates typically pull capital away from riskier assets such as equities, particularly technology stocks whose valuations rest on long-term growth expectations.
Alongside the equity decline, the South Korean won weakened against the US dollar, reflecting selling pressure in currency markets as investors moved toward safer assets.
The moves underscore how sensitive South Korea's financial markets are to external forces, from US monetary policy to the outlook for the global semiconductor industry — a sector that serves as a pillar of the country's export-driven economy.
