South Korea's stock market suffered a sharp selloff on Friday after a historic rally pushed valuations and investor positioning to extreme levels, exposing how heavily the market had become dependent on a handful of artificial intelligence-linked semiconductor stocks. The benchmark Kospi plunged 6%, wiping out early gains after briefly crossing the 8,000 mark for the first time in history during morning trade.
The sudden reversal stunned investors because the rally had appeared unstoppable just days earlier. The Kospi had nearly tripled from around 2,600 levels a year ago, making it one of the world’s best-performing major equity markets.
