The storage chip dividend fades as $100 billion in foreign capital accelerates its exit from Korean stocks.

South Korea was for much of this year the poster child for the red-hot global artificial intelligence trade. Now, by just about any measure, the $4.3 trillion stock market is rapidly losing investor attention. Trading volumes have plunged 70% from a peak in late May, foreign investors are pulling out at the fastest pace in Asia and local retail traders are retreating. The Kospi, the worlds best-performing major index in the first half, has since fallen 22%, making it the worst performer in the second half, even as US equity gauges with similarly heavy AI exposure keep notching record highs. Behind the reversal: South Koreas AI fortunes are heavily tied to just two memory-chip giants, Samsung Electronics and SK Hynix, which sit at the heart of the global AI supply chain. That concentration has become a vulnerability as investors question whether the memory boom can last, and a violent, leverage-fueled selloff this summer has left many global funds wary of returning. The two chipmakers account for more than half of the Kospis weighting and drove the indexs gains earlier this year. Foreign investors have pulled $131 billion from Korean equities this year, exchange data show, the most among major Asian markets.