KOSPI Slides Toward Bear Market as Investors Doubt AI Demand Sustainability

South Korea’s KOSPI extended losses with an intraday drop of over 6%, falling more than 20% from its June peak and teetering on a technical bear market. Samsung Electronics and SK Hynix lost roughly 7% and 5% respectively, as investors reassess the outlook for AI-related chip demand.

The Korean benchmark has been one of the world’s top-performing equity markets this year, yet its heavy reliance on just two chip giants leaves it highly vulnerable to sudden sentiment shifts. Leveraged ETFs amplify swings on both the upside and downside, worsening market volatility.

Chip stocks kept sliding even after Samsung reported a 19-fold jump in quarterly earnings earlier this week. The persistent selloff shows traders are demanding solid evidence to justify massive AI supply chain capital spending.

“The heightened volatility stems largely from fundamental uncertainty,” said Ian Samson, portfolio manager at Fidelity International. “AI-fueled semiconductor demand looks robust, but it is backed by around $1 trillion in capital expenditure concentrated among a small group of major tech firms.”

He warned the market faces notable downside risks if concentrated AI chip spending proves unsustainable.