South Korea stocks hit 9-month low as US midterm results spark AI selloff

South Korean stocks experienced their lowest point in nine months on Friday, as Democrats' victory in the US midterm elections triggered a sell-off in AI stocks. The benchmark KOSPI index plummeted over 8% in early trading, reaching its lowest level since February 6 at 4,911.28, and prompted a 20-minute circuit breaker before settling at 3.9% lower at 5,174.84.

"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. The market turmoil followed a sharp decline in technology and semiconductor shares on Thursday, the worst single-day loss in over a year for US stock markets.

Concerns over AI regulations and data center construction in various states, including Texas, have dampened investor confidence. Analysts warn that the focus will shift to how much AI investment will be delayed and whether unwarranted worries will be resolved. South Korean retail investors, who fueled the KOSPI's recent rally, expressed skepticism and plan to take a wait-and-see approach.

Finance Minister Lee Hyoung-il convened an emergency meeting with policymakers, deciding to temporarily ease rules on retail investors' leveraged investments to curb forced selling and stabilize the market.