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Kospi nose-dives 3.79% as AI bubble fears spark U.S. sell-off

Published: 21 Nov. 2025, 18:24 Updated: 23 Nov. 2025, 17:19

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 3,853.26 points on Nov. 21, down 151.59 points, or 3.79 percent, from the previous trading session. [NEWS1]

Korean stocks sank Friday as fears of a possible AI bubble sparked a sell-off in U.S. tech shares, pushing the benchmark Kospi down 3.79 percent and driving the biggest foreign outflows in almost five years.

The Kospi closed at 3,853.26, down 151. 59 points, or 3.79 percent, from the previous session. The index plunged more than 4 percent shortly after the open but pared some losses as retail investors stepped in to buy. The Kosdaq lost 3.14 percent to finish at 863.95.

Foreign investors sold 2.82 trillion won ($1.92 billion) worth of equities on the main board, the largest daily net selling since Feb. 26, 2021, when outflows reached 2.83 trillion won. Retail investors bought 2.3 trillion won and institutions purchased 495.6 billion won, but their combined buying could not offset the downturn. Foreign investors offloaded more than 3 trillion won across the broader market including the Kosdaq.

Semiconductor and energy-related stocks that surged earlier on AI momentum took the heaviest losses. SK hynix dropped 8.76 percent to 521,000 won and Samsung Electronics slid 5.77 percent to 94,800 won. Doosan Enerbility fell 5.92 percent, HD Hyundai Electric dropped 7.85 percent and LS Electric sank 12.85 percent.

A screen displays the The Dow Jones Industrial Average after close of trading on the floor at the New York Stock Exchange (NYSE) in New York City on Nov. 20. [REUTERS/YONHAP]

The sell-off followed sharp losses overnight on Wall Street. The S&P 500 fell 1.56 percent to 6,538.76, the Nasdaq Composite dropped 2.16 percent to 22,078.05 and the Dow Jones Industrial Average slipped 0.84 percent to 45,752.26.

Nvidia’s strong third quarter results failed to lift sentiment as renewed concerns about stretched AI valuations rattled markets. Analysts on Wall Street warned that weaker profitability at major tech clients could hurt Nvidia’s future sales outlook.

Remarks by U.S. Federal Reserve Governor Lisa Cook further dampened risk appetite after she emphasized that “there is an increased likelihood of outsized asset price declines.” Nvidia shares lost 5.88 percent, while memory-related stocks Micron and SanDisk plunged 10.87 percent and 20.33 percent, respectively.

CNN’s Fear & Greed Index, a tool used to measure investor sentiment, fell to 6, signaling “extreme fear.” The number was the lowest reading since a drop to 4 in April during U.S. tariff policy announcements.

A screen in Hana Bank's trading room in central shows the closing numbers of the Kospi and Kosdaq indexes and the won-dollar exchange rate on Nov. 21. [NEWS1]

Risk aversion and foreign outflows from Korean markets further weakened the won. The won-dollar rate jumped past 1,470 at the open and ended at 1,475.6, the weakest level since April 9.

Brokerages expect volatility to stay elevated until the U.S. Federal Open Market Committee meeting in December, which will set the tone for U.S. interest rates. Recent U.S. labor data showed strong job creation alongside a higher unemployment rate, complicating the Fed’s policy path.

Han Ji-young, an analyst at Kiwoom Securities, said the market is highly sensitive to negative news, adding that “AI-related developments and remarks from Fed officials could drive short-term price swings.”

Han noted that a rebound remains possible depending on upcoming indicators and AI-linked events.

"The Kospi surged from 3,200 to 4,200 between September and October, so this looks like a short-term correction,” said Jo Ah-in, an analyst at Samsung Securities.

Jo added that the market has already undergone about a 9 percent pullback over the past three weeks and said investors should adjust strategies while monitoring conditions.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NAM YOON-SEO [[email protected]]