Why Did the Kospi Suffer a Worst-in-the-World Plunge?

[Anchor]

Han Jiyeon, our reporter for "Friendly Economy," is here with us on this Thursday. Han, today (October 1) we are talking about the domestic stock market.

[Reporter]

The once-booming Kospi has even been labeled the world's worst by foreign media outlets.

Looking at the Kospi over the past three months, it has tumbled by nearly 20 percent.

It recorded the lowest performance among major global stock markets.

During the third quarter, from July to September, the Kospi dropped by 18.8 percent.

Over the same period, the U.S. S&P 500 actually rose by 2.3 percent.

In fact, having jumped 60 percent since the beginning of the year, the Kospi was previously one of the best-performing markets globally alongside Taiwan.

However, as the AI boom lost some steam in early July, a flood of selling orders poured in, centered on memory semiconductor stocks.

Since Samsung Electronics and SK Hynix account for nearly half of the Kospi's total market capitalization, a wobble in these two stocks causes the entire index to shake. Foreign media pointed to leverage as one of the main culprits.

Leverage involves borrowing money to place amplified bets.

A hedge fund founded by a former OpenAI employee made excessive bets on Korean memory stocks, and when the fund collapsed, a massive amount of leveraged investment positions were liquidated.

Market volatility was further amplified by single-stock leveraged ETFs heavily favored by retail investors—products that track twice the daily price movement of a single stock—shaking the market even more.

An investment chief at a global asset management firm even stated, "While you can expect decent returns now, seeing another surge like this year's is completely out of the question."

At the same time, expectations coexist that Korean semiconductor companies will continue to reap the benefits as AI investments are still ongoing.

[Anchor]

Next week, the head of AMD is visiting South Korea, correct?

[Reporter]

AMD Chair and CEO Lisa Su is returning to South Korea after seven months.

She is scheduled to discuss cooperation with domestic AI semiconductor companies.

AMD is the runner-up chasing NVIDIA in the AI semiconductor market.

A roundtable meeting featuring Chair Lisa Su is being arranged in Seoul on October 8.

She is reportedly set to meet with the heads of domestic NPU companies and the Minister of Science and ICT.

As a side note, an NPU is a chip specifically designed to handle only AI calculations.

While a GPU is an all-purpose chip that handles everything, an NPU can be viewed as an AI-dedicated chip.

The core objective is to bundle AMD's CPUs and GPUs together with domestically produced NPUs.

This is referred to as heterogeneous AI infrastructure.

Using the character for "different," it means mixing different types of chips within a single system.

It is similar to a soccer team where forwards, defenders, and goalkeepers each take on their respective positions to play as one team.

There is a reason why AMD is going to such lengths.

NVIDIA currently dominates the AI chip market.

Therefore, AMD is trying to broaden its horizon by forming alliances with Korean companies, and the industry views this ultimately as a move to keep NVIDIA in check.

[Anchor]

Is NVIDIA firing back in response?

[Reporter]

NVIDIA has been leveraging its long-standing partnerships with major conglomerates like Samsung and SK.

In particular, CEO Jensen Huang recently expressed open affection, stating that he cannot help but love South Korea.

He made these remarks on September 28 in New York, U.S., while receiving an award given to individuals who have contributed to the advancement of South Korea-U.S. relations.

Samsung Electronics Chairman Lee Jae-yong and SK Chairman Chey Tae-won attended in person to congratulate him.

Jensen Huang even held up a Galaxy phone, praising it as the brightest phone in the world.

The tense rivalry between AMD and NVIDIA will continue in Seoul this November.

NVIDIA plans to host an AI event at COEX for two days starting November 9, and AMD also plans to hold an AI event in Seoul that same month.

The reason both companies are putting so much effort into South Korea is that the country is both a major seller and a buyer.

High-performance AI chips rely heavily on a type of memory called HBM, which exchanges data at ultra-high speeds, and Samsung Electronics and SK Hynix dominate the global market in this sector.

At the same time, domestic companies are massive customers as they expand AI data centers and purchase AI chips in large quantities.

The perspective of other foreign investors is quite similar.

Korean stocks held by investors from nine European countries totaled 701 trillion won as of the end of August, more than doubling over the span of a year.

While rising share prices played a role, their holdings grew by an even greater margin than the Kospi's growth rate over the same period.

Some European asset managers reportedly expressed regret at not being able to load up on more Samsung Electronics and SK Hynix shares due to investment limits.

This goes to show that despite weak stock market report cards, South Korea's presence in the AI semiconductor arena remains as strong as ever.
※ Please note: This article was translated by AI and may contain errors.