KOSPI Plunges 5.3% and Nikkei Falls as Chip Selloff Hits Asia Despite Oil Relief

The Quick Take

• KOSPI plunged 5.28% and Japan's Nikkei fell on Wednesday as a sharp semiconductor sector selloff weighed on Asian markets
• The chip selloff offset support from plunging oil prices and Democrats' midterm victory, which boosted Chinese stocks
• Nasdaq 100 futures fell 0.70% and S&P 500 futures were mixed during Asian hours, signaling a bifurcated global reaction to US election results
• Asian markets diverged sharply: Korea and Japan fell on semiconductor selling while China advanced, reflecting different sector exposures

Asian equity markets traded in sharply divergent fashion on Thursday morning as a semiconductor sector selloff dominated moves in South Korea and Japan, overwhelming the broader positive from Democratic midterm victories and oil price declines. KOSPI — heavily weighted toward Samsung Electronics, SK Hynix and other chip manufacturers — fell 5.28%, an unusually large single-day drop that places it among the worst performers in Asia for the session. Japan's Nikkei similarly fell on semiconductor exposure, while Chinese markets advanced on reduced geopolitical risk expectations.

The Korea-Japan selloff signals that semiconductor investors are digesting a specific negative catalyst — likely concerns about chip demand deceleration, inventory normalization or earnings guidance disappointments from key players. South Korea's KOSPI is structurally exposed to memory chip cycles: Samsung and SK Hynix together represent over 40% of the index, making any negative chip narrative outsized in its index impact. The divergence with Chinese stocks advancing highlights how index compositions determine which markets benefit from each geopolitical scenario.

Watch for the catalyst driving the chip selloff specifically — earnings warnings, inventory data or customer demand signals from Samsung and SK Hynix will determine whether KOSPI's decline is a one-day event or the beginning of a re-rating. The macro variable is the global AI chip spending cycle: if enterprise and cloud spending slows heading into 2027, memory chip demand normalizes, hurting both Korean and Japanese semiconductor suppliers. Upcoming Samsung quarterly guidance and TSMC demand signals are the key leading indicators.

Sources: economymiddleeast.com | Analysis by market.news AI