Kospi Slides More Than 3% on AI Profitability Fears, Middle East Tensions; Foreigners Sell $1.13 Billion
Summary
- The Kospi and Kosdaq were down 3.17% and 4.17%, respectively, on concerns over AI industry profitability and military tensions in the Middle East.
- Reports that OpenAI's annualized revenue was about $50 billion, roughly 29% below the previously cited $70 billion, heightened caution over expanding AI investment.
- On the Kospi market, foreign investors were net sellers of 1.56 trillion won ($1.13 billion), while retail and institutional investors turned net buyers, and large-cap semiconductor stocks were broadly lower.
South Korean stocks were tumbling on Oct. 12 as concerns over profitability in the artificial intelligence industry and military tensions in the Middle East weighed on investor sentiment.
As of 2 p.m., the Kospi was down 3.17% from the previous session at 6,415.94. The benchmark index has fallen for four straight trading days since Oct. 6. The Kosdaq was also off 4.17% at 855.03, widening its decline.
The market's weakness was driven in part by earnings concerns surrounding the U.S. AI industry. Caution over expanding AI investment has grown after news emerged that OpenAI's annualized revenue was lower than previously understood by the market. OpenAI told investors on Oct. 8 that its annualized revenue as of the end of September was about $50 billion, roughly 29% below the previously cited $70 billion.
Geopolitical uncertainty in the Middle East also dampened risk appetite. Yemen's Houthi rebels attacked Saudi Arabia, causing casualties, and reports said a U.S. citizen was among the victims, raising the possibility of American military involvement. Asked whether the U.S. could join Saudi attacks on the Houthis, President Donald Trump said, "Maybe. We'll take a look."
Heavy foreign selling added to the index's losses. As of 1 p.m., foreign investors were net sellers of 1.56 trillion won ($1.13 billion) on the Kospi market. Retail investors were net buyers of 1.09 trillion won ($789 million), while institutions were net buyers of 23 billion won ($16.6 million).
Large-cap semiconductor stocks were also broadly weaker. Samsung Electronics and SK Hynix fell 3.24% and 3.63%, respectively, while Samsung Electronics preferred shares and SK Square dropped 1.6% and 4.67%. Uncertainty over earnings at AI-related companies, combined with Middle East-driven risk aversion, was adding to selling pressure across the South Korean stock market.
