Kospi retreats from 8,000 after AI windfall remarks

South Korea's benchmark Kospi retreated Tuesday after coming within touching distance of the 8,000-point mark, as a top South Korean policymaker's proposal to distribute a "citizen dividend" funded by AI profits rattled investor sentiment, a Bloomberg report suggested.

The index closed at 7,643.15, down 2.29 percent from the previous session. Although it climbed as high as 7,999.67 shortly after the opening bell, hovering just below the 8,000 mark, the benchmark quickly reversed course and plunged 5.1 percent at one point to as low as 7,421.71.

Bloomberg suggested that the Kospi’s decline was driven by remarks made by Kim Yong-beom, the presidential chief of staff for policy, on AI boom-related profits generated by chip giants such as Samsung Electronics and SK hynix.

"The gains from the AI era are not the result of a few specific companies, but were built on an industrial foundation that the entire nation has collectively developed over the past half-century," Kim wrote Monday on his Facebook.

"A portion of those gains should be structurally returned to all citizens," Kim said, claiming the country should pay citizens a "dividend" funded by taxes on the profits.

After briefly climbing to a fresh high within sight of the 8,000 level, the Kospi quickly reversed course and plunged. The decline was led by foreign investors, who unloaded 5.6 trillion won ($3.8 billion) worth of shares on the main board in a wave of profit-taking.

Joined by institutional investors' net selling of 1.21 trillion won, retail investors' 6.68 trillion won in net buying was not enough to offset the outflows.

"The comments in a Facebook post by presidential policy chief Kim Yong-beom fueled sharp swings in Korean stocks on Tuesday as investors struggled to parse the scope of Kim’s proposals," Bloomberg wrote.

The benchmark Kospi partly pared losses and wrapped up in the 7,600 range after Kim clarified that he was referring to using excess tax revenue generated from the AI boom, rather than introducing a new windfall tax on corporate profits. The clarification, however, was not enough to restore earlier momentum.

Shares of Samsung Electronics and SK hynix closed at 279,000 won and 1.835 million won, respectively, down 2.28 percent and 2.39 percent each, although both stocks had touched fresh highs in early trading.

Bloomberg noted that growing concerns have surfaced, particularly in Korea, with public calls for industry leaders from SK hynix to Samsung Electronics to share more of the gains from the AI boom, alongside attention to labor tensions, including a strike at Samsung Electronics.

Meanwhile, the presidential office distanced itself from Kim’s remarks, clarifying that the comments do not represent the administration's official position.

"The content posted by the policy chief on social media is an individual opinion unrelated to internal discussions or reviews within the presidential office," it said in a press statement.