[Edaily Reporter Seong Joowon ] CNBC reported on the 9th that the KOSPI index—which had posted the world’s highest returns so far this year—has entered a bear market in just a few weeks. The KOSPI plummeted more than 5% on the 8th, falling to a level 20% below its all-time high recorded on June 19. However, it closed slightly higher on the 9th amid a highly volatile trading session.

CNBC noted that this sharp decline was the result of a combination of growing skepticism among global investors regarding the artificial intelligence (AI) rally and extreme concentration in specific stocks. Manish Raichaudhuri, CEO of Emer Capital, analyzed, “South Korea’s recent drop is the result of a convergence of heightened AI skepticism among global investors and extreme market concentration.”
In fact, as of June, the two semiconductor companies— SamsungElectronics(005930), and SK hynix(000660) —accounted for more than half of the KOSPI’s market capitalization. Analysts suggest that this excessive reliance on these two stocks, while driving this year’s rally, also served as the trigger for this correction.

“A Valuation Adjustment, Not a Fundamental Issue”

Jeong In-yoon, CEO of Fibonacci Asset Management Global, said, “This correction was triggered by positioning rather than a deterioration in fundamentals.” He explained that after a strong rally, Korean stocks had become one of the most heavily traded AI plays globally, so it didn’t take much to trigger profit-taking. He characterized the recent decline as “a healthy reset rather than a fundamental shift in outlook.”
Peter Kim, a global investment strategist at KB Securities, noted that the recent sharp drop in the KOSPI reflects structural changes in the modern market. He said, “Due to the ‘gamification’ of finance, we are seeing sharp fluctuations driven more by news cycles and trends than by fundamentals,” adding that retail capital flows, leveraged exchange-traded funds (ETFs), and AI-driven herd behavior are making swings of 5–10% commonplace. The KOSPI volatility index has surged by more than 200% since the beginning of this year.
Although SamsungElectronics announced earnings that exceeded market expectations on the 7th and memory prices continue to rise, its stock price actually fell due to concerns over AI investment spending. CEO Jeong In-yoon said, “The market is questioning the pace of profit growth, not the sustainability of AI demand itself,” adding, “This suggests a valuation adjustment rather than the end of the AI cycle.”
Rolf Bulk, head of the Semiconductor and Infrastructure Division at the Puchon Group, noted that memory prices rose 50–80% in the second quarter compared to the previous quarter and are expected to rise further in the second half of the year. He emphasized that memory manufacturers’ fundamentals remain solid, citing years of supply shortages and long-term contracts with hyperscale customers.
Despite this correction, the KOSPI has risen more than 70% so far this year and more than 75% last year.

"Mid-Term Outlook Remains Constructive"

Experts identified SK hynix’s upcoming U.S. listing on the 10th and the second-quarter earnings announcements by SamsungElectronics and SK hynix scheduled for the end of this month as key turning points for a future rebound. The view is that if both companies make constructive statements regarding the sustainability of the memory cycle in the second half of the year, this could provide positive momentum not only for semiconductor stocks but also for the KOSPI as a whole.
CEO Jeong predicted, “While volatility may persist in the short term, the medium-term outlook remains constructive,” adding, “Once global risk sentiment stabilizes, foreign investors are likely to return to the Korean market, given Korea’s pivotal role in the AI supply chain.”