Stocks Sink on Slower Investment and Faster Development... Market Falls into the 'AI Trap'

[Financial News] The KOSPI Composite Index has fallen into a quagmire of surging U.S. Treasury yields, rising international oil prices, and calls to slow the pace of artificial intelligence (AI) development. Foreign investors have weighed on the market by selling more than 10 trillion won over five consecutive trading days.
According to the Korea Exchange (KRX) on the 16th, the KOSPI Composite Index had fallen for four consecutive trading days through the previous day, sliding to 6,627.26. After breaking above the 7,000 mark on the 9th, the index has been unable to find momentum for a rebound.
Foreign investors, in particular, have shown a clear selling trend. They have continued selling for five consecutive trading days since the 9th, with net sales totaling 10.2787 trillion won during that period. Institutional investors also weighed on the market, recording net selling for three consecutive trading days from the 11th through the previous day.
Analysts say growing uncertainty surrounding AI, amid rising interest rates and oil prices, has negatively affected the index. The yield on 10-year U.S. Treasuries surpassed 5% the previous day for the first time since October 2023. Brent Crude Oil futures and West Texas Intermediate crude oil (WTI) futures rose by more than 1%, closing at $105.68 and $101.39, respectively.
Investor sentiment was also weakened by leading AI companies advocating for a slower pace of technological development. Dario Amodei, CEO of Anthropic, posted on his blog on the 12th local time that "the pace of improvement in AI model performance should be slowed." Global AI industry leaders have since successively raised the need to moderate the pace of development.
Han Ji-young, a researcher at KIWOOM Securities, analyzed, "Domestic and overseas semiconductor stocks are once again being put to the test because of concerns about slowing AI development. If a slowdown in the AI investment cycle created downward pressure on stock prices last July, this time, concerns that AI technology is advancing too quickly are instead fueling selling."
Some analysts, however, say it is excessive to interpret the development as a slowdown in the AI investment cycle. Lee Kyung-min, a researcher at Daishin Securities, explained, "This discussion is not about halting AI development, but about regulating its pace and verifying its stability. It means that the pace of development, rather than the pace of investment, needs to be adjusted. In other words, development must keep pace with stronger security systems, including ethics."

[email protected] Minji Seo Reporter