South Korea's stock market plunge drags down emerging market assets, with cooling AI expectations becoming a key factor

Odaily reported that driven by a sharp decline in the South Korean stock market, emerging market stocks and currencies weakened for a third consecutive trading day. The MSCI Emerging Markets Index fell 1.7% to 1,728.66 points, while the Korea Composite Stock Price Index (Kospi) once dropped by as much as 7% during the session. The sell-off was primarily concentrated in the chip sector. Samsung Electronics and SK Hynix led the declines, with these two companies accounting for more than half of the Kospi's market capitalization. The downturn followed Broadcom's AI chip sales outlook, which failed to meet high market expectations, triggering a shift in investor sentiment.

Charu Chanana, Chief Investment Strategist at Saxo Markets, stated that if US non-farm payroll data comes in stronger than expected, it could serve as another reason for investors to reduce crowded AI trades. The market is currently closely monitoring this data to gauge the future path of the Federal Reserve's interest rates.