South Korea’s main stock market index, the Kospi, recorded a sharp fall of 7.4% on Tuesday, closing at 5,914.35. The sell-off reflected mounting investor concerns over the sustainability of the AI-driven rally that has dominated global risk assets in recent months.
Steep declines in chip stocks fuel market anxiety
Major technology companies led the drop in Seoul, with Samsung Electronics losing 7.7% and SK Hynix falling 8.8%. These companies represent two of the world’s largest memory chip producers and have been central to the Kospi’s performance throughout the year.
The sudden market downturn was triggered in part by news that Chinese chipmaker ChangXin Memory Technologies (CXMT) is making notable progress in memory semiconductor development. Analysts view CXMT’s advancement as a potential threat to established chipmakers such as Samsung Electronics, SK Hynix, and Micron Technology, intensifying regional competition in the high-stakes memory market.
Mini dictionary: ChangXin Memory Technologies (CXMT) is a major Chinese semiconductor company specializing in DRAM memory production, often seen as a national champion in China’s push for domestic tech advancements.
Investors have grown increasingly uneasy as the Kospi’s gains this year have largely depended on the performance of a small number of chipmakers, which have benefited from optimism about artificial intelligence technologies pushing global demand for memory chips.
Sharp losses in heavyweight chip stocks have underscored the Kospi’s vulnerability to changes in global tech sentiment, as investors reassess the sustainability of the AI-led rally.
Global equity markets under pressure
Major indices across Asia followed South Korea’s downward trend. Japan’s Nikkei 225 slid by 2.5%, Hong Kong’s Hang Seng Index dropped 1%, and China’s Shanghai Composite slipped 1.1%.
Meanwhile, U.S. stocks posted mixed results on Monday, with the S&P 500 and the Nasdaq Composite both ending slightly lower. In contrast, the Dow Jones Industrial Average rose 0.4%. Early Tuesday, U.S. stock futures reflected further investor caution as oil prices retreated against a backdrop of rising geopolitical tensions in the Middle East.
Crypto market absorbs new wave of liquidations
The wave of risk reduction also extended to the digital asset market. CoinGecko data showed that total cryptocurrency market capitalization dipped 0.9% in the past 24 hours to $2.897 trillion. Bitcoin traded down 0.4% at around $83,995, while Ether fell 1.5% to $2,530. XRP recorded a drop of 2.5%, and Solana retreated 3.6% over the same period.
| Asset | 24H % Change | Price |
|---|---|---|
| Bitcoin | -0.4% | $83,995 |
| Ether | -1.5% | $2,530 |
| XRP | -2.5% | Not specified |
| Solana | -3.6% | Not specified |
Crypto derivatives traders faced significant losses as $815.47 million in leveraged positions were liquidated over 24 hours. Long positions made up $687.71 million of these liquidations, with Bitcoin and Ether bearing the largest share of the negative moves.
Large liquidations signal that volatility triggered by declining sentiment in equities can quickly spill over into crypto markets, especially when traders lean heavily on leverage.
Analysts note that the abrupt downturn in AI-linked equities can affect risk appetite in other asset classes. The latest moves reinforce the connection between the performance of tech stocks and sentiment in digital asset markets, as traders respond swiftly to changes in global risk dynamics.
