Kospi slides 3.7% as AI worries hit chip shares

South Korea's Kospi fell 3.73% to 5,552.74 on Tuesday, losing 215.27 points after touching 5,493.24, market data showed. The index opened 0.6% lower and extended losses as chip shares weakened after a two-session rebound.

The decline followed a seven-session slide of about 21% from Oct. 6 through Thursday, before the index rose for two straight sessions. The won strengthened 2.2 won from the previous stock-session close to 1,328.1 per dollar by 3:30 p.m.

Chip shares lead decline

Foreign investors sold a net 535.4 billion won, while institutions sold 1 trillion won, according to market data. Individuals bought a net 900 billion won. Decliners outnumbered advancers 771 to 117, while trading volume reached 259.75 million shares worth 16 trillion won ($12.97 billion).

Samsung Electronics fell 2.98% to 211,500 won. SK hynix declined 4.23% to 1.22 million won, while SK Square, its parent firm, dropped 5% to 741,000 won. Samsung Electro-Mechanics slipped 1.28% to 1.16 million won.

Lee Kyoung-min, an analyst at Daishin Securities, said concerns over credit risk and returns tied to AI investment had not been resolved. "Profit-taking emerged following the previous session's gains, sending the market back into negative territory," Lee said.

The next test is Seoul's Wednesday open, when investors will see whether foreign and institutional selling extends beyond Tuesday's drop.