[DigitalToday reporter Jinju Hong (홍진주)] The KOSPI swung between steep falls and sharp rebounds over two days, exposing vulnerabilities behind a global AI investment boom. U.S. jobs data and a shift in outlook for the semiconductor sector rattled not only South Korean stocks but also the cryptocurrency market at the same time, bringing renewed attention to the power of global liquidity that has underpinned AI and digital assets.

CryptoSlate reported on June 10 that the KOSPI tumbled 8.29 percent on June 8 to close at 7,484.41, then rebounded 8.18 percent the next day, June 9, recovering to as high as 8,096.93. That amounted to a swing of about 17 percent in just two days.

The outlet said the moves were more akin to what is seen in the cryptocurrency market, which is more volatile than traditional stock markets. It also said the episode was analysed as a symbolic event showing the flow of global investment funds centred on AI semiconductors and cryptocurrencies, rather than a problem unique to South Korea’s market.

Behind the KOSPI’s surge was a concentration in semiconductor shares led by Samsung Electronics and SK Hynix. The KOSPI is made up of about 950 listed companies, but the rise was driven by a small number of large semiconductor firms. The KOSPI’s gain so far this year was about 92 percent, and about 72 percent of that was tallied as coming from gains in Samsung Electronics and SK Hynix.

The immediate trigger for the plunge was U.S. jobs data. U.S. nonfarm payrolls in May rose by 172,000, announced on June 5, far above the market forecast of 85,000. A stronger-than-expected labour market is interpreted as lowering the likelihood of an interest rate cut by the Federal Reserve. That immediately put pressure on AI and semiconductor-related stocks that had commanded a premium on high growth expectations.

Investor sentiment weakened further after Broadcom issued an AI business outlook that fell short of expectations. Broadcom shares fell about 13 percent, and a U.S. semiconductor index also posted a double-digit decline. That was behind Samsung Electronics and SK Hynix each plunging by about 10 percent shortly after the domestic market opened.

Leverage also amplified the fall. South Korean retail investors expanded debt-funded bets on large semiconductor shares, and margin debt swelled to a record 37.74 trillion won. When share prices move against the direction of leveraged positions, brokerages demand additional collateral, which can lead to forced selling and deepen declines. The fear index surged to a record level above its peak during the financial crisis.

The shock did not stop at South Korean stocks. The Nasdaq index in the United States also fell more than 4 percent intraday, and investors shifted into defensive stocks such as consumer staples and retail shares instead of reducing exposure to tech stocks. An analysis was also raised that Strategy is seen by traditional finance investors as a de facto bitcoin leveraged investment vehicle. It underscored that AI-related assets and the cryptocurrency market are becoming increasingly closely connected.

Bitcoin also failed to escape the same shock. After the U.S. jobs data release, bitcoin fell to around $59,100, its low for the year, and more than $1.7 billion in leveraged positions were liquidated in a single day. Outflows also continued from U.S. bitcoin investment products.

By contrast, the KOSPI’s rebound on June 9 was interpreted as the result of recovering investor sentiment rather than a change in fundamentals. News of a ceasefire between Israel and Iran eased geopolitical anxiety, and Nvidia CEO Jensen Huang (젠슨 황) also influenced market stability by calling the recent selling a "buying opportunity". A rebound in U.S. semiconductor shares also supported the domestic market.

Views in the market are divided on the move. Bulls judge that demand for AI investment and the semiconductor cycle remain solid. Bears warn that because the index’s rise has been concentrated in a small number of stocks and leveraged investing has expanded, the shock could be bigger in a future correction.

Investors are now turning their attention to the Federal Reserve meeting and inflation data in the United States. The outcome of the Fed meeting scheduled for June 16-17 and U.S. inflation data is expected to determine whether the recent volatility remains a simple correction or expands into a warning signal for risk assets overall centred on AI and cryptocurrencies.