KOSPI Collapse: South Korea's Stock Market Faces Unprecedented Plunge

South Korea's KOSPI index fell dramatically by over 12%, triggering market chaos as key tech stocks plummeted. The oil price hike, spurred by Middle Eastern tensions, has cast doubt on the AI-driven stock boom. Foreign investments played a major role in the sell-off, impacting the Korean won as well.

South Korea's benchmark KOSPI stock index experienced its worst-ever decline, dropping over 12% on Wednesday. The usually vibrant Korean Silicon Valley fell silent during lunchtime as workers monitored their trading portfolios, responding to the market downturn, which followed a year of record highs fueled by the AI boom.

The volatility came amidst rising tensions in the Middle East, causing oil prices to spike and prompting South Korea—heavily reliant on energy imports—to reassess growth expectations. Key tech stocks, including Samsung Electronics and SK Hynix, saw significant drops, contributing to an 18.4% fall in market value.

The Korean won also weakened notably against the U.S. dollar for the first time in 17 years. As foreign investors exited large-cap tech stocks, analysts noted that the sell-off wasn't primarily driven by local retail traders. Meanwhile, LNG provider Daesung Energy surged after an Iranian blockade announcement, contrasting the broader market trend of declining shares.