Korean Chip Stocks Face $131B Foreign Exodus as AI Rally Fades
Foreign investors have withdrawn $131 billion from South Korean equities in 2026, the largest outflow among major Asian markets, as enthusiasm for AI-related investments cools. The benchmark Kospi index has fallen 22% in the second half of the year, reversing its status as the world's top-performing market in the first half. Trading turnover in the $4.3 trillion equity market has dropped 70% from its late-May peak. Samsung Electronics and SK Hynix, which account for over half the index's weighting, are central to this volatility. While Samsung reported a nearly ninefold increase in quarterly operating profit, its shares still declined, signaling deepening investor concerns about the sustainability of the semiconductor boom. Corporate buyback programs worth 55 trillion won are nearing completion, and retail participation has waned, with margin loans falling to 33 trillion won from a June peak of 38.6 trillion won. Capital is rotating toward Taiwan, whose Taiex index gained 70% this year, outperforming the Kospi by 23 percentage points last quarter due to a more diversified AI hardware ecosystem.