Most Asian stocks fell sharply on Tuesday, led by a near 10% plunge in South Korea’s KOSPI as investors rushed to unwind positions in technology after a blistering rally in the sector.
The selloff triggered a market-wide circuit breaker on the Korea Exchange, temporarily suspending trading for the second time in the day. The KOSPI was last down 8.1% at 8,375.31, sharply reversing gains from an AI-driven rally that had made it one of the world’s best-performing major equity markets this year.
Regional markets took a weak lead-in from Wall Street, where tech stocks also fell during the overnight session. The sector was hit by heavy profit-taking as investors sold on fears of higher U.S. interest rates this year, with heavyweights including Alphabet and SpaceX logging deep losses.
S&P 500 Futures fell 1% in Asian trade, pointing to deeper losses on Wall Street in the coming session. Focus this week is on a key PCE inflation reading for more cues on the U.S. economy.
Iranian and U.S. officials appeared to make progress in talks held in Switzerland over the weekend, helping ease immediate concerns over a disruption to oil supplies through the Strait of Hormuz.
But investors remained cautious amid uncertainty over the durability of any agreement. Markets were also digesting last week’s hawkish Federal Reserve meeting, which prompted traders to further scale back expectations for U.S. interest rate cuts.
KOSPI leads losses as SK Hynix, Samsung plummet
South Korea’s KOSPI was the region’s worst-performing major benchmark, falling nearly 10% after recently scaling record highs.
The decline was driven largely by heavyweight semiconductor stocks, with SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930) each falling around 12%.
The selloff came just a day after SK Hynix overtook Samsung to become South Korea’s most valuable listed company, underscoring the extent of the recent AI-driven rally in local chipmakers.
Tuesday’s decline in SK Hynix was exacerbated by reports that the company was scaling back the pace of its HBM4 expansion and shifting resources toward conventional DRAM production, where margins have recently overtaken those of HBM.
The development fuelled speculation that Samsung Electronics could narrow the gap in supplying HBM for advanced memory chips.
The latest selloff reflects a sharp unwinding of crowded AI and semiconductor trades that have dominated Asian equity performance for much of 2026. South Korean shares have been among the biggest beneficiaries of the global AI boom, with foreign investors pouring into memory-chip makers amid surging demand for advanced semiconductors used in AI servers and data centres.
Index heavyweight and major AI beneficiary Hyundai Motor (KS:005380) also slid over 12%.
Tech rout batters broader Asian indexes
Japan’s Nikkei 225 slid 3.5%, while the TOPIX tumbled 2.6%, with chip-related and export-oriented stocks giving back some of their recent gains after both indexes touched record highs earlier this week.
Japanese purchasing managers index data showed both manufacturing and services activity picked up in June, although it also showed a sharp increase in input prices due to disruptions caused by the Iran conflict.
A sustained increase in producer prices is expected to invite more hawkish moves from the Bank of Japan, after it raised interest rates last week.
Chinese markets also logged deep losses. The Shanghai Shenzhen CSI 300 slid 2.8%, while the Shanghai Composite fell 1.4% on continued losses in tech.
Hong Kong’s Hang Seng index slipped 1.8%, also pressured by weakness in heavyweight technology and electric vehicle stocks.
Australia’s ASX 200 fell 0.3% ahead of key inflation and labor market data due later this week. The releases are expected to provide fresh clues on the Reserve Bank of Australia’s policy outlook, after the central bank announced a pause in its rate hike cycle.
The ASX also benefited from having relatively less tech weightage than most of its Asian peers.
India bucked the regional weakness slightly, with the Nifty 50 falling 0.6%, relatively less than some of its regional peers.
Source: Investing