Escalating AI valuation concerns, China’s semiconductor advances and geopolitical tensions have triggered a sharp selloff, erasing more than $2.4 trillion in market value.
Moneycontrol News
July 29, 2026 / 11:36 IST
markets
- KOSPI & TAIEX lost over $2.4T in market cap.
- KOSPI fell more than 40%, TAIEX dropped 17.2%.
- AI valuation, China competition caused market drop.
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South Korea’s KOSPI and Taiwan’s TAIEX have witnessed a sharp correction from their record highs as a global technology selloff intensified amid mounting concerns over artificial intelligence (AI) valuations, rising competition from Chinese semiconductor companies and regional geopolitical tensions.
Over the past 28 trading sessions, the KOSPI has fallen more than 40 percent from its record high of 9,114.55 touched on June 22 to around 5,468. The correction has wiped out around $1.59 trillion in market capitalisation, with the value of South Korea’s stock market declining from a record $5.11 trillion to around $3.52 trillion. The decline has pushed South Korea’s ranking by stock market capitalisation to ninth globally from sixth a month earlier, placing it behind Canada and the UK.
Taiwan’s TAIEX has also come under pressure, declining 17.2 percent over the past 28 trading sessions from its record high of 47,741.51 on June 22 to around 39,530. The correction has erased nearly $830 billion in market capitalisation, reducing the size of Taiwan’s equity market from a record $5.37 trillion to around $4.54 trillion. Taiwan remains the world’s sixth-largest equity market by market capitalisation, behind India but ahead of Canada and the UK. Earlier, it ranked fifth globally, ahead of India.
The selloff accelerated as semiconductor stocks came under heavy pressure amid growing concerns over the sustainability of the AI spending boom. Investor sentiment has also been hit by signs of rapid progress in China’s advanced semiconductor manufacturing, intensifying competition for global chipmakers.
Market participants have also turned cautious amid concerns over crowded positioning in semiconductor stocks and elevated valuations following the AI-driven rally. Nvidia Corp.’s plans to pursue AI infrastructure deals worth more than $750 billion have further fuelled concerns about whether the massive investments being made across the AI ecosystem can generate adequate long-term returns.
The scale of AI-related spending has also raised concerns over rising debt levels and the growing prevalence of so-called “circular” transactions, where technology companies, infrastructure providers and AI startups increasingly depend on one another to sustain investment. Investors fear such interlinked funding structures could amplify losses if demand for AI products and services fails to meet elevated expectations.
Moneycontrol News
first published: Jul 29, 2026 11:36 am
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