South Korea stocks plunge as US midterm results spark AI selloff (updated)

LG Energy Solution

06/11/2026 24:49

KOSPI posts lowest close since late March as chipmakers drop
Analysts and fund managers say market worries excessive
Policymakers loosen regulations to control market volatility
Updates to market close
SEOUL, Nov 6 (Reuters) - South Korean shares plunged on Friday as Democrats' win in the US midterm elections sparked anxiety over the impact on the global AI investment boom, with a selloff in AI stocks prompting policy measures to ease market volatility.
The benchmark KOSPI index ended down 324.11 points, or 6.02%, at 5,059.69, its lowest close since March 31, after dropping 5.3% in the previous session. 
Earlier in the day, the index fell as much as 8.8% to below the 5,000-mark for the first time since February, triggering a 20-minute circuit breaker that temporarily halted trading.
Shares of chipmaker Samsung Electronics 005930.KS ended down 6.4% and peer SK Hynix 000660.KS closed 10.4% lower, cutting earlier losses of as much as 11% and 14%, respectively. Analysts said the market slump was excessive.  
"It is time for correction, but we feel that there may be some overreaction to the outcome of the midterm election," said Jun Kwang-woo, chairman of the Institute for Global Economics, a financial think tank in Seoul. 
"Hopefully we will stabilise very soon because after all, we understand that the speed of building AI infrastructure, especially data centres, may slow down a bit because of the number of concerns in many states including Texas," said Jun, who is a former chairman of South Korea's National Pension Service. 
US stock markets suffered their worst single-day session in over a year on Thursday, led by a sharp unwind in high-flying technology and semiconductor shares, as sweeping gains for the Democratic Party in the US midterm elections sparked fresh uncertainty over policies on AI and data centres.
"Going forward, the focus of the market will be on whether aggressive foreign selling will calm down, how much of actual AI investment will be delayed and whether excessively-reflected worries will be resolved," said Seo Sang-young, an analyst at Mirae Asset Securities. 
A Seoul-based asset manager said the selloff was somewhat overdone due to a skewed reading of the midterm election results and unwinding by Wall Street hedge funds.
"Even people who were being cautious about the market didn't expect a drop this big," the manager said, speaking on condition of anonymity.

INDEX CUTS LOSSES
South Korean retail investors, who were a driving force behind the KOSPI's world-beating rally earlier this year, said they would take a wait-and-see stance as the market seemed to be overreacting to the US midterm election results. 
"Isn't the market overreacting? It's not like Democrats will scrap all the data center constructions," said Ahn Haesung, a 26-year-old retail investor. "I should have booked some profit from my 'all-in tech' investment." 
"I will keep going with index-tracking investment, but when it comes to Samsung, I think it is time to seriously consider (selling)," he added, referring to his return of more than 100% from a five-year-long investment in Samsung Electronics.
South Korean Finance Minister Lee Hyoung-il held an emergency meeting with the country's top economic policymakers and decided to temporarily ease rules on retail investors' leveraged investments to contain forced selling and limit market volatility. 
Retail and institutional investors bought local shares worth 605 billion won and 1.7 trillion won, respectively, against a foreign selloff of 2.8 trillion won ($2.06 billion). 
For the week, the KOSPI fell 11.7%. It has dropped 44% from its June peak but still gained 20% so far this year.
"The future direction of AI investment has not changed yet. Even if Democrats put the brakes on it, human greed will still win," said another South Korean retail investor in his 60s, who plans to watch market changes as he maintains his current investment portfolios. 

($1 = 1,358.3000 won)

 (Reporting by Cynthia Kim, Heejin Kim, Jihoon Lee, Yena Park and Moonyoung Tae; Editing by Ed Davies, Jochelle Mendonca and Ronojoy Mazumdar)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters Messaging: cynthia.kim.thomsonreuters.com@reuters.net))