South Korea’s stock market crashes 20%, nearing a bear market, as the AI boom hits the awkward reality of “the more spectacular the results—and the more it blows up— the harder the stock falls.”

BlockBeats News, July 8—On Wednesday afternoon, South Korea’s stock market extended its losses as investors reassessed the outlook for AI demand. The KOSPI index once fell by more than 6%, slipping below 7,200 points, and has retreated by more than 20% from its historical peak set last month, putting it on course to enter a technical bear market.

Storage-chip manufacturer SK Hynix fell by as much as 5%, while Samsung Electronics dropped 6.9%. The Korea Exchange has initiated a “temporary trading halt” mechanism for the KOSPI index, pausing algorithmic trading. South Korea’s stock market has been one of the strongest performers globally this year, but its trend is highly dependent on SK Hynix and Samsung Electronics, and volatility is amplified when sentiment for the sector weakens. Even though Samsung Electronics announced earlier this week that its quarterly profit surged by 19 times, chip stocks continued to face pressure.

Jordan Klein, a TMT-sector expert at Mizuho Securities, said investors’ reaction to Samsung’s preliminary second-quarter performance was excessive. He believes this round of sell-off in semiconductor stocks is more about fading momentum rather than worsening fundamentals. Klein said that if one-time bonus expenses are excluded, Samsung’s operating profit actually significantly exceeded expectations, and the implied operating profit margin in its memory business could potentially exceed 80%. He added that Samsung’s operating profit for a single quarter has already surpassed the total for the past three years, calling it “extremely short-sighted” to react to Samsung’s stock price based solely on preliminary results.

Meanwhile, AI trading rotation is emerging across Asian markets. Chinese stocks listed in Hong Kong rose, with the Hang Seng China Enterprises Index up as much as 3.4%, and the Hang Seng Tech Index gaining more than 5% at one point; Alibaba rose more than 8%, and Tencent climbed more than 3%. Market participants believe funds are moving out of crowded trades focused on AI infrastructure and into markets with lower valuations and more value-stock characteristics. Reuters’ report on DeepSeek’s in-house developed chips, as well as The Information’s report that Zhipu AI is considering designing its own AI chips, further boosted this round of rotation. (Jinshi)