Update
KOSPI Selloff and Bitcoin Divergence
South Korea's stock market, as measured by the KOSPI, experienced a significant 5.5% decline on Tuesday, marking the latest in a series of sharp selloffs. This downturn contrasts with the recovery in bitcoin, which has rebounded from its summer lows. Bitcoin's price has risen to around $87,000, significantly above its summer lows of about $58,000. The divergence between the KOSPI and bitcoin is highlighted by their different price movements, with the KOSPI falling while bitcoin is on an upward trend. This divergence is attributed to concerns over AI spending and competition from Chinese chipmakers, which have led to a selloff in South Korea's chipmakers, including SK Hynix and Samsung Electronics. The negative relationship between the KOSPI and bitcoin, indicated by a correlation of -0.41 over a 20-day period, suggests that as investors reduce exposure to the AI trade, they may shift towards bitcoin, potentially benefiting its price. The latest selloff in the KOSPI was influenced by comments from Broadcom CEO Hock Tan, who likened speculative AI investing to gambling, and by advances in Chinese memory-chip rival CXMT, adding to fears about competition and margins in the chip industry.