As the frenzy surrounding artificial intelligence (AI) investment begins to subside, South Korea’s stock market is grappling with the twin challenges of significant capital outflows by foreign investors and a notable downturn in market trading activity. Exchange data reveals that foreign investors have pulled out a cumulative total of $131 billion from South Korea’s stock market since the start of the year, marking the largest capital exodus among major Asian markets. Given that South Korea’s stock market boasts a total market capitalization of roughly $4.3 trillion, trading volume has plummeted by 70% from its peak in late May. Furthermore, the benchmark KOSPI index has seen a cumulative decline of 22% since the latter half of 2026. Earlier in the year, buoyed by surging demand for AI memory chips, the KOSPI index stood out as one of the top-performing major stock indices on the global stage.