Turnover in South Korean stocks fell to the lowest this year as investor enthusiasm dwindled, suggesting the AI-heavy market may struggle to regain its previous peak. The Kospi Index's average daily traded value dropped to 20.6 trillion won ($15 billion) in September, the smallest tally of 2026 and less than half the amounts seen during the peak months of May and June.

Frenzied retail buying on AI enthusiasm drove Korean stocks to new highs earlier this year, before skepticism over the payoffs triggered a 22% selloff in July. The benchmark has since clawed back some ground but has failed to sustain above the key 7,000 level.

"Volatility should drop further and doubts about the chip cycle should be cleared up" for foreign investors to return, said Jason Minsang Kam, head of active equity management at Kyobo Life Insurance Co. He expects the Kospi to be range-bound for now.

The Kospi — up about 59% this year — remains the world's best-performing major benchmark, with corporate buybacks lending support. Still, headwinds abound with the Federal Reserve's anticipated interest-rate hike likely to further pressure growth stocks.

"The energy in the market is dwindling," said Kang Songchul, an analyst at Eugene Investment & Securities. "As domestic interest rates are rising, the money in the market has moved to interest rate-linked savings products as the stock market is relatively less attractive."