Kospi Plunges 7.6% as Chip Rout Erases Nearly $298 Billion

South Korean stocks suffered one of their sharpest declines in years on Thursday, as fears over artificial intelligence spending, semiconductor demand and higher global borrowing costs drove investors out of technology shares.

The benchmark Kospi closed at 5,554.22, down 7.57 percent, wiping nearly 400 trillion won ($297.7 billion) from market value in a single session. The technology-heavy Kosdaq fell 7.65 percent to 760.82. Both markets activated sell-side sidecars and Level 1 circuit breakers as losses accelerated during trading.

Foreign investors led the retreat, selling a net 3.6 trillion won of shares on the main market and extending their net-selling streak to eight sessions. Domestic institutions bought 1.69 trillion won, while retail investors purchased 1.29 trillion won, but their buying was not enough to offset the pressure.

The decline was concentrated in some of South Korea’s most valuable companies. Samsung Electronics dropped 9.48 percent to 210,000 won, and SK hynix fell 11.06 percent to 1.262 million won. Samsung Electro-Mechanics lost 15.36 percent, SK Square declined 10.21 percent, Hyundai Motor slid 5.74 percent and LG Energy Solution retreated 4.62 percent.

The rout followed hotter-than-expected US inflation data, which pushed the yield on the 10-year US Treasury above 5.3 percent and revived concern that monetary policy could remain restrictive. Higher yields are especially challenging for the artificial intelligence investment cycle because data centers, chips, power systems and related infrastructure require heavy capital spending. Sharp overnight declines in US artificial intelligence and technology companies added to the pressure on Asian markets.

The latest fall extended the Kospi’s losing streak to seven sessions. Since Oct. 6, the index has dropped about 20 percent and lost more than 1,100 trillion won in market capitalization. It is now down more than 40 percent from its June peak, underscoring how quickly sentiment has reversed after an earlier surge driven by enthusiasm for artificial intelligence and memory chips.

South Korean financial authorities convened an emergency meeting after the close. They characterized the pace of the sell-off as excessive and emphasized that the country’s major industries continue to produce solid earnings and that broader economic fundamentals remain sound.

Market attention will now turn to third-quarter corporate results. Strong earnings from major chip and technology companies could ease doubts about artificial intelligence-related demand, while persistently high US interest rates or continued foreign selling could keep volatility elevated.