Seoul slides, China climbs

AI investors are packing their suitcases.

As US stocks slid today following the collapse of the Iran ceasefire, Chinese equities moved the other way, with investors rotating into the country’s increasingly competitive AI sector.

The gains were led by Alibaba, which jumped 11.03% after reports ahead of earnings suggested its loss-leading e-commerce business isn’t losing as much money as it once was. Peers Baidu and JD.com also climbed 4.93% and 4.3%, respectively, as investors took their money out of the overheating memory trade and shifted it into Chinese LLM developers, whose AI offerings remain far cheaper than US rivals like OpenAI and Anthropic.

Seoul’s selloff

That’s bad news for South Korea, whose KOSPI fell 5.35%, extending its losses to more than 20% from its recent high last month, pushing the index into technical bear market territory.

The Kospi is facing spillover from the index’s two biggest constituents, Samsung and SK Hynix, which together account for roughly half the benchmark. Samsung fell another 6.25% today, continuing its selloff this week as investors worried memory-chip pricing and earnings may have peaked. Meanwhile, SK Hynix’s planned Nasdaq depositary receipt—potentially raising up to $29 billion—has sparked dilution concerns.

The next destination

If this story feels familiar, that’s because the KOSPI has made a habit of keeping investors on their toes this year.

Last month, the index fell 8% in a single day, only to erase those losses the very next day as retail traders piled back in. Then, just two weeks ago, it tumbled another 10% in just one day, after regulators warned about excessive leverage in the market.

Adding today’s selloff to the mix, three major drawdowns are beginning to look like a pattern. As investors grapple with the KOSPI’s repeated bouts of volatility and Korea’s growing ties to the US-led AI supply chain, China’s resurgent tech sector could increasingly look like a compelling alternative, offering cheaper AI exposure and a way to diversify away from Korea’s memory-heavy market.

That could be welcome news for Alibaba. While the stock is still down 26.05% this year, analysts believe the company is nearing a turning point after narrowing losses in its food delivery business, allowing investors to refocus on its higher-margin cloud and AI operations.

For now, Alibaba still has baggage. But for AI investors looking beyond Korea’s turbulence, it may be the next ticket worth booking.—SY