Asian markets: Following the burst of the AI bubble and uncertainty caused by the prolonged US-Iran war, the global markets have been reeling under pressure for some time. However, the South Korean Kospi followed a different path altogether. Despite the outbreak of the US-Iran war on 28th February 2026, the Korean index continued to scale upward after some early jitters and surged to a record high of 9,385.59 on 22 June 2026.
However, after hitting this new peak, the Kospi index triggered profit-booking and finished at 9,114.55 on 22 June 2026. Since then, the index has remained a ‘sell on rise’ for its investors. Today, the Kospi index finished at 5,593.56, recording a loss of around 38.50% from its 22 June 2026 close.
Why is Kospi falling?
According to market experts, the Korean index has been reeling from a sell-off for nearly a month due to the burst of the AI bubble across the globe and renewed fears of a US-Iran war. They said that tech, especially AI and semiconductor stocks, is under pressure, which has intensified selling pressure in the South Korean markets. They said that mounting Chinese concern is also a major reason for the drop in Asian bourses, including the South Korean Kospi.
“As an institutional investor investing in the global equity market, I think the biggest problem for Korea is that volatility is too high,” said Young Jae Lee, senior investment manager at Pictet Asset Management in London. “We can’t just put [money] into a very gambling type of situation.”
Speaking on the majors drags for the South Korean Kospi, Ponmudi R, CEO at Enrich Money, said, “In recent times, Asian markets, including South Korean Kospi, are reeling under the selling pressure due to the renewed selling in semiconductor stocks, which continues to weigh on investor sentiment.”
The Enrich Money expert said that selling Korean tech stocks is not unique. It is happening across most global bourses, including Nasdaq. The Wall Street index has lost around 6.75% over the past month, suggesting that concerns over elevated AI-related valuations remain a dominant theme despite the easing geopolitical backdrop.
Mounting Chinese concern
Pointing towards the mounting Chinese concern weighing on the South Korean markets, Anuj Gupta, a SEBI-registered market expert, said, “The sell-off is driven by mounting concerns over intensifying Chinese competition in memory chips following CXMT’s Shanghai listing, alongside growing investor caution over AI-related capital spending.”
The SEBI-registered market expert said that some credit should be given to the renewed pressure from the US-Iran war, as soaring crude oil prices are also casting doubt on investors’ minds.
Opportunity for bottom fishing?
“It’s difficult to buy the dip in Korea, where you’re seeing interesting levels,” said Ian Samson, multi-asset portfolio manager at Fidelity International. “Just the volatility means that from a portfolio construction perspective, we have to be careful about buying too aggressively.”
(With inputs from Bloomberg)
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
