Key insights
- South Korean stocks are experiencing significant foreign outflows and declining trading activity as enthusiasm for AI investments wanes. The Kospi has fallen, with major components Samsung Electronics and SK Hynix becoming sources of vulnerability. This contrasts with Taiwan, which is attracting investors due to its broader AI supply chain exposure. Concerns over demand and the completion of share buyback programs are impacting sentiment.
Investing.com -- South Korean stocks are struggling to attract buyers as enthusiasm for artificial intelligence-related investments fades, triggering heavy foreign outflows and a sharp decline in trading activity.
Trading turnover in South Korea’s $4.3 trillion equity market has plunged 70% from its late-May peak, while the benchmark Kospi has fallen 22% in the second half of 2026, according to Bloomberg.
The reversal follows a first-half rally that made the Kospi the world’s best-performing major equity benchmark, driven largely by demand for AI memory chips.
Samsung Electronics and SK Hynix, which together account for more than half the index’s weighting, have become a source of vulnerability as investors question whether the semiconductor boom can continue.
Foreign investors have withdrawn $131 billion from Korean equities this year, the largest outflow among major Asian markets, according to exchange data compiled by Bloomberg.
Concerns over demand were evident when Samsung shares declined Thursday despite the company reporting a nearly ninefold increase in quarterly operating profit.
Market support from corporate share repurchases is also weakening. Samsung and SK Hynix are approaching completion of combined buyback programmes worth 55 trillion won ($41 billion).
Retail participation has similarly declined following July’s selloff.
Outstanding margin loans have fallen to approximately 33 trillion won from a June peak of 38.6 trillion won, while brokerage deposits have dropped to around 100 trillion won from nearly 140 trillion won.
Investors are increasingly favouring Taiwan, whose technology sector offers broader exposure to the AI supply chain.
Taiwan’s Taiex has gained 70% this year, outperforming the Kospi by approximately 23 percentage points last quarter.
UBS Global Wealth Management said it prefers Taiwan equities for tactical AI exposure, citing the market’s diversified technology hardware ecosystem and strong capital spending by major technology companies.
Despite the downturn, South Korea remains among 2026’s stronger-performing markets overall, supported by earlier gains and expectations of continued AI infrastructure investment.
ProPicks AI evaluates 000660 alongside thousands of other companies every month using 100+ financial metrics. Using powerful AI to generate exciting stock ideas, it looks beyond popularity to assess fundamentals, momentum, and valuation. The AI has no bias—it simply identifies which stocks offer the best risk-reward based on current data with notable past winners that include Super Micro Computer (+185%) and AppLovin (+157%). Want to know if 000660 is currently featured in any ProPicks AI strategies, or if there are better opportunities in the same space?