KOSPI and Nikkei 225 fall sharply on October 20 as investors shun AI stocks

South Korean and Japanese stocks fell sharply on Tuesday, October 20, 2026, despite a Wall Street tech rebound, as investors avoided rebuilding positions in Asia's major AI-linked companies before a key earnings week. The KOSPI dropped 2.36% to 5,631.95, while the Nikkei 225 lost about 0.6%. The Korean decline was driven by renewed foreign selling of chip stocks like SK Hynix and Samsung Electronics, with overseas funds offloading 605.8 billion won by mid-morning. SK Hynix fell 3.6% amid concerns over a possible US listing of its Solidigm unit, which investors fear could dilute value. In Japan, SoftBank Group dropped 3.3%, highlighting sensitivity to AI infrastructure financing doubts. Analysts note the KOSPI needs to reclaim its 200-day average near 6,410 for a sustainable recovery, a tough hurdle after recent losses. Broader regional pressure came from Brent crude near $110 per barrel and political unrest in France, which weighed on European futures, while the MSCI Asia-Pacific index fell 0.93%.