Trading on South Korea’s Kospi index was halted for the third time this week on Friday as an 8% fall triggered a circuit breaker designed to curb panic selling. The index closed 5.8% lower, capping a week of extreme volatility that has seen the mechanism activated five times this year.
The rout was led by technology shares, with investors worrying that recent leaps in stock prices had gone too far. The sell-off followed a sharp drop in Apple shares on Thursday, after the company announced it would raise prices on iPads and MacBooks because of soaring computer chip costs. Apple fell 6% in its biggest one-day decline in more than a year.
“South Korea's Kospi trading halted for third time this week as tech stocks plunge on Apple price hike and AI spending fears.”
“Traders are reassessing the valuations of tech stocks, while some are taking profits after a rally in recent months,” said David Makaryan, senior partner at the Alpha Pacific Group. “The long term investment case for AI remains compelling, but investors are becoming far more selective about which companies can justify the valuations the market has assigned to them.”
Microsoft shares also fell after it said it would increase prices for its Xbox gaming consoles due to higher component costs. The moves have raised concerns that rising component prices could hit device sales, potentially slowing demand for computer chips – the very building blocks of the tech industry.
The anxiety extends beyond hardware. Some investors are increasingly nervous about the hundreds of billions of dollars being spent by big tech firms this year to build artificial intelligence infrastructure. The high cost of commercialising AI tools is gradually being passed on to consumers, said Raymond Woo, an analyst at Kyoto University Innovation Capital.
That “naturally raises questions” about how quickly demand for such tools will match the investment into AI, and whether the valuations of tech stocks today are realistic, Woo added.
Elsewhere in Asia, Japan’s Nikkei 225 closed more than 4% lower as shares in technology investment giant SoftBank plunged 12.5%. Major indexes in Taiwan and mainland China were also sharply lower, mirroring the global tech sell-off.
Friday’s 20-minute halt on the Kospi marked the third time this week that circuit breakers have been triggered on South Korea’s main exchange, underlining the depth of investor jitters. With Apple and Microsoft both passing on higher costs to consumers, the question now is whether demand for devices and AI services will hold up – or whether the market has already priced in a future that may not arrive as quickly as hoped.