Korea's KOSPI sinks 3.65% as Samsung, SK hynix slide despite record profit

South Korea's main share index, the KOSPI, closed 3.65% lower at 6,384.24 on Monday, 12 October 2026, its weakest finish since 11 August. The smaller, tech-heavy Kosdaq fared worse, losing 4.83% to end at 849.19. The two biggest companies on the Seoul exchange, Samsung Electronics and SK hynix, fell by more than 4% each, even though Samsung announced the largest quarterly profit in the country's history only four days earlier. Heavy selling by foreign funds was the main force behind the slide.

The fall shows how quickly sentiment can turn in markets that have risen on the artificial intelligence trade. South Korea's index is dominated by memory-chip makers, whose earnings have soared because data centres need vast amounts of high-bandwidth memory. Samsung's preliminary third-quarter figures, released on Thursday 8 October, put revenue at about 195 trillion won and made it the first South Korean company to earn more than 100 trillion won of operating profit in a single quarter. Yet the shares fell sharply on the first trading day of the new week. When record results cannot hold a stock up, investors are usually worried about what comes next, not about what has already happened.

Two worries stood out. Analysts in Seoul linked the chip sell-off to fresh fears of an AI bubble after reports about OpenAI's revenue, and to weakness in US chip stocks. Local brokerages also pointed to higher US borrowing costs, with the 10-year US Treasury yield above 5.2%. When safe US bonds pay that much, global funds have less reason to hold riskier emerging-market shares, and they tend to sell the biggest and most liquid names first. In Korea, that means Samsung and SK hynix.

The pressure was not limited to Seoul. In India, the Sensex lost 547.65 points, or 0.76%, on the same Monday to close at 71,924.68, while the Nifty 50 ended at 22,363.35. The size of the moves was very different, but the backdrop of foreign money leaving emerging markets is shared. For Indian investors, the Korean slide is a reminder that chip-heavy Asian markets can swing much harder than broader indices when the AI story wobbles.

Short-term: Traders will watch whether foreign selling continues and how US chip shares and Treasury yields behave this week. A further rise in US yields or more doubts about AI spending could extend the losses, while any calm in those areas could bring bargain buying into the large chip stocks.

Long-term: The episode tests whether memory-chip demand from AI can keep growing fast enough to justify the earnings now expected. If AI spending holds up, the record profits may look cheap in hindsight; if companies building AI systems slow their spending, chip makers' earnings and share prices could reset lower.

Who is affected: Investors in Korean shares and in Asian or emerging-market funds that hold Samsung and SK hynix, global technology investors exposed to the AI trade, and Indian market participants watching foreign fund flows across the region.

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