South Korea’s stock market plunges as AI-driven boom fades
Summary
South Korea’s stock market has fallen sharply for two days in a row, losing about $2.18 trillion in value. The drop is linked to less interest in chipmaker stocks that had grown due to AI investments, and the government is considering new rules to stabilize the market.Key Facts
- South Korea’s stock market lost about $2.18 trillion after two days of sharp declines.
- The KOSPI index fell up to 12.6% on Wednesday and dropped nearly 11% the day before.
- The index has lost almost 40% of its value since early July.
- Stocks of chipmakers, which benefited from AI investment, have seen decreased demand.
- South Korean Finance Minister Koo Yun-cheol apologized for allowing risky leveraged ETFs (investment funds that borrow money to increase returns).
- The government plans to limit how much investors can put into single-stock leveraged ETFs and increase trading costs to reduce risky trades.
- Authorities, including the Bank of Korea governor, are meeting to discuss how to stabilize the market.
- Despite recent losses, the KOSPI index is still up 41.5% in U.S. dollar terms so far this year, the best among major markets.
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