AI stock sell-off deepens as investors dump chipmakers

An AI stock sell-off deepened on Tuesday as markets in Asia tumbled, with trading on South Korea’s Kospi temporarily halted after it plunged more than 10 per cent and Tokyo sliding 4 per cent.

Shares in SK Hynix shed as much as 10 per cent, while its larger rival, Samsung Electronics, fell more than 12 per cent. The two companies account for about 40 per cent of the South Korean stock market, giving them an outsized influence.

The declines come after SK Hynix, the world’s second-largest memory-chip maker, fell sharply in New York on Monday. Its American depositary receipts closed more than 7 per cent lower at $143 — $6 lower than when they started trading earlier this month.

Nvidia closed 5 per cent lower in New York on Monday, allowing Apple to regain its crown as the world’s most valuable listed company. The iPhone maker is now worth $4.95tn after a 1.1 per cent gain, while Nvidia is valued at $4.75tn.

The Seoul-listed shares of SK Hynix have now fallen about 45 per cent since hitting a record high above Won3mn ($2,041) in June, wiping about $570bn off its market value and marking one of the world’s steepest declines over the period, second only to SpaceX. The shares had tripled earlier this year before peaking.

SK Hynix’s “stock has gone up too much, too fast this year, so this kind of correction is inevitable”, said Chan H Lee, managing partner at Petra Capital Management, a Seoul-based hedge fund. “But we are likely to see a rebound soon as deleveraging is almost done and global funds will flow in again once they think the correction is complete.”

The Kospi’s Tuesday decline meant the index has fallen by about 25 per cent over the past month and is down by a third from its June peak. It remains 46 per cent higher for the year to date, however.

Japan’s stock market also fell sharply on Tuesday. The Nikkei 225 dropped more than 4 per cent as chip stocks declined, with Kioxia plunging as much as 18 per cent. The broader Topix was down closer to 3 per cent.

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