Due to these 3 reasons, South Korea’s stock market fell by 10%, trading remained closed for 20 minutes.

There was a big fall in the stock market of South Korea on Monday. Due to sharp selling in the shares of chip manufacturing companies, the country’s main stock market index Kospi fell by 724.37 points or 10.73% to 6,031.38. The situation became so bad that the exchange had to stop trading for 20 minutes. The impact of this decline was not limited to South Korea only. Japan’s Nikkei 225 and Taiwan’s Taiex index also fell by more than 4%. Three major reasons have emerged behind this stir in the market.

Investors’ thinking changed regarding AI sector

For some time now, there was a tremendous rise in the shares of AI related companies across the world. But now questions are being raised in the minds of investors whether such a huge investment on AI will be able to continue for a long time. Meanwhile, the world’s largest chip company Nvidia made an AI infrastructure deal worth 75 thousand crore dollars, but even after this the company’s shares remained under pressure. This increased the concern of investors further. Vey-Sern Ling, Managing Director of Union Bancaire Privé, says that earlier investors were considering every news related to AI as a buying opportunity, but now the same people are selling shares rapidly even on small negative news.

China’s growing power raises concerns

The second major reason for increasing pressure on the market was the news from China. According to the report, a Chinese government company has started mass production of certain types of chip making machines. Bloomberg report says that a Shanghai company is now making DUV lithography machines. Due to this, the possibility of impact on the sales of ASML Holding, the world’s largest chip machine manufacturer, has increased. Apart from this, the rapid growth of China’s ChangXin Memory Technologies (CXMT) also increased the concern of investors. For this reason, selling in shares of semiconductor companies around the world intensified.

Samsung and SK Hynix drag the market down

The most pressure in the South Korean market came from the shares of two big companies. SK Hynix shares fell by about 10%. At the same time, shares of Samsung Electronics fell by 9.15%. SK Hynix’s US ADRs also hit a record low below their initial offer price, further increasing investors’ nervousness. The share of these two companies in Kospi index is more than 50%. In such a situation, as soon as their shares fell, the entire market came down rapidly.