KOSPI breaks its long trend line as AI doubts hit chipmakers
A sharp two-day drop in Korean chip stocks put the index below its 200-day average and tested the AI trade.
What happened
The KOSPI finished the day down 5.4% after shedding 7.4% over two days. SK Hynix closed more than 10% lower and the index fell below its 200-day moving average for the first time since late July. A warning from the Broadcom boss about a casino mentality in AI investing added to the pressure, and chip stocks are heading toward their worst stretch in 16 months.
Sources: Cointelegraph, Financial Times, MarketWatch. Details
Why it matters
Korean memory makers are a gauge of AI spending, so their slide spreads doubt to chip stocks elsewhere. The index still shows +43.22% for the year, so the drop follows a very large run. It now sits -33.78% below its 52-week high after a -13.05% move over one week.
What history shows
October has been a soft month for the KOSPI. The average October return is -0.43% across 29 years since 1997, and it finished higher in 45% of them.
The index is already -11.74% for October so far.
Seasonal backdrop
November has a better record for the KOSPI, with an average of +2.91% and gains in 59% of years. The last ten years averaged +2.11%.
Scenarios
Possible paths and the signs that would point to each. No probabilities. Testable ones are graded on the scorecard.
Selloff extends
Doubts over AI spending and Chinese competition keep weighing on memory makers and the index.
- Further large daily drops in SK Hynix and Samsung
- US chip stocks failing to hold early gains
Dip gets absorbed
After the five-day losing streak for chipmakers ended, the index stabilises and reclaims its trend line.
- A daily close back above the 200-day average
- Foreign selling of Korean chip shares slowing
What to watch
- Daily closes of the KOSPI against its 200-day average
- Commentary from chip executives on AI spending
Sources and method (4)
- The KOSPI extended its losses for the week to 7.4% and fell below its 200-day moving average for the first time since late July. SK Hynix closed more than 10% lower. Cointelegraph, Oct 13
- The KOSPI finished the day down 5.4% after shedding 7.4% over two days. Semiconductors led the losses amid fears over AI expenditures and competition from China. Cointelegraph, Oct 13
- Chip stocks slid after the Broadcom boss warned of a casino mentality in AI investing, and declines for Samsung and SK Hynix dragged the Kospi sharply lower. Financial Times, Oct 13
- Chip stocks are heading toward their worst stretch in 16 months as AI fatigue grips the market. MarketWatch, Oct 13