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South Korea's Kospi swings sharply after AI-driven tech rally
The Kospi fell from above 9,000 points in mid-June to about 5,500 within weeks before partially recovering to around 6,800.
BBC Business reports that some South Korean retail investors have taken heavy losses amid sharp swings in the country’s tech-led stock market. Bank worker Yongjoon Kim said he lost 20 million Korean won, about $14,000, last month, money he intended to help buy a home as he prepares for marriage later this year.
The outlet points to the Kospi, described as the world’s most volatile stock index, and says the benchmark saw one of the sharpest corrections in its history between June and August. The index more than doubled since the start of the year to above 9,000 points in mid-June, before plunging to 5,500 within a few weeks and later recovering to roughly 6,800.
BBC Business attributes the sell-off in recent weeks to concerns about the large amounts of money being spent on artificial intelligence. It says the slump has hit personal investors who bought tech stocks over the past year, including Woongsa Kim, who used part of a work bonus to buy shares in SK Hynix and saw the stock quadruple before much of the gain was wiped out, leaving the investment worth about 300 million won.
The report also highlights that leverage has amplified the pain for some investors. It cites investment analyst Tobias Reger in saying the extreme rally fueled euphoria that pushed some to take out loans to invest, so the subsequent downturn proved especially damaging for those using borrowed capital.
Latest closeKospi 6,579.04 ▲3.7%