TL;DR
London’s FTSE 100 touched 10,951 points on Wednesday, its highest level since February, as money moved out of technology and semiconductor stocks. Seoul’s Kospi closed 6% down and triggered a market-wide circuit breaker for a second consecutive session, after SK Hynix reported record quarterly profits that still fell short of what investors wanted.
The divergence is the story. The FTSE 100’s weighting towards finance and energy — the composition that held it back through years of US tech gains — shielded it from a sell-off that hit Asia and New York hard. Standard Chartered, Reckitt Benckiser and Rio Tinto all delivered better-than-expected profits or larger shareholder payouts on the same day. AJ Bell investment director Russ Mould credited the index’s “lack of exposure to technology and AI stocks” alongside those results. The index closed at 10,908, two points below February’s record.
SK Hynix’s numbers show how far the bar has moved. The company makes the memory chips AI datacentres depend on, and it posted record second-quarter profits; its shares still fell as much as 20% before recovering to 10% down. “SK Hynix delivered strong results, but in today’s AI market strong is no longer enough,” said Gary Tan, a portfolio manager at Allspring Global Investments in Singapore. Samsung Electronics closed 5% lower. The two together account for more than half the Kospi’s market capitalisation, which is why the index sits almost 40% below its peak of a month ago, and why South Korea’s finance minister, Koo Yun-cheol, told the national assembly the government was reviewing stabilisation measures.
Analysts pointed to retail investors buying chipmakers with borrowed money — leverage that inflated last month’s rally and is now accelerating the exit.
The BBC’s account of the same week adds two things the price moves do not: a reported Chinese manufacturing breakthrough that could make China more self-sufficient in chip production, and the circular-funding worry that the largest AI firms hold stakes in or have lent money to one another. Investor Eileen Burbidge’s verdict was that the bubble “hasn’t burst but it’s letting out air”.
Looking Forward
Wednesday’s halt was the second in two sessions, following Tuesday’s Kospi suspension and Nvidia’s loss of the top spot. What changed in between is the quality of the evidence: SK Hynix broke its own records and was sold off anyway, which moves the question from stretched valuations to whether AI capital spending can be recouped at all. Railway mania is the instructive comparison — the technology remade economies while plenty of investors lost money, and unlike track, datacentres need re-equipping every few years. For UK readers, the FTSE’s insulation cuts both ways: an index that rises when AI sentiment sours is also one with little domestic exposure to the upside.