South Korea's benchmark KOSPI index suffered a brutal sell-off on Thursday, plunging 6% to close at 2,410.20 — its worst single-day performance since March 2020. The rout was driven by a collapse in heavyweight chip stocks, as investors panicked over mounting evidence that artificial intelligence spending may be peaking and the imposition of fresh US tariffs on Korean semiconductor exports.
Samsung Electronics, the index's largest component, crashed 8.4%, while memory chip rival SK Hynix tumbled 8.9%. The pair account for roughly a third of the KOSPI's weighting, amplifying the broader market damage. The sell-off was compounded by a 5.2% drop in the tech-heavy Kosdaq index, which tracks smaller innovative firms.
The trigger was a double blow: overnight reports that the Biden administration is preparing a new round of tariffs targeting South Korean-made semiconductors, and disappointing guidance from US AI chip leader Nvidia, which flagged weaker-than-expected demand from hyperscale data centre clients. Analysts at Seoul-based Daishin Securities described the session as 'a perfect storm of trade policy risk and AI demand uncertainty'.
For UK investors, the fallout is not academic. Many British pension funds and institutional portfolios hold significant exposure to Asian technology stocks via global equity funds and exchange-traded funds. The KOSPI slide also dragged down London-listed Asian tech ETFs, with the iShares MSCI South Korea ETF falling 4.1% in early European trading. The FTSE 100 itself was largely insulated, dipping just 0.3%, but the wider FTSE All-World index shed 1.1% as risk aversion spread.
Market strategists warned that the rout could have further legs if US tariff policy hardens. 'This is not a one-day event for Korea,' said Michael Wan, senior currency analyst at MUFG in London. 'If tariffs are imposed, it will hit the entire supply chain — and that includes UK companies reliant on Korean memory chips for everything from smartphones to data centres.' The pound strengthened slightly against the won, offering some relief for UK importers of Korean electronics.