KOSPI Plunges Amid AI Concerns and Government-Fueled Volatility

The KOSPI index has been fluctuating sharply in 2026 due to investor concerns over AI's sustainability. Despite capital expenditures among top hyperscalers growing rapidly, the South Korean benchmark index has declined significantly.

Samsung Electronics and SK Hynix shares have led the decline, with Samsung losing 22% of its value in a month and SK Hynix dropping more than 34%. The government's push to channel household savings into domestic equities and reduce capital outflows has fueled volatility in the stock market.

Economist Steve Hanke notes that South Korea's benchmark index is now the world's most volatile, surpassing even Bitcoin. Lale Akoner, global market analyst at eToro Group Ltd., attributes this to a textbook example of a crowded trade meeting leverage.