Investor enthusiasm has cooled, dragging daily trading volume on South Korea's stock market to its weakest level this year, raising doubts about whether the AI-heavy bourse can reclaim its previous record highs.

The average daily turnover on the Kospi fell to 20.6 trillion won ($15 billion) in September, the lowest for 2026 and less than half of the peak seen in May and June. Earlier this year, retail investors piled into the market on the back of an AI-driven rally, pushing stocks to new highs, but concerns over profit realization later triggered a sharp 22% correction in July.

Although the benchmark index has since recovered some ground, it has repeatedly failed to hold above the critical 7,000-point level. Kim Min-sang, head of active equity investment at Kyobo Life, said foreign capital will only return once market volatility eases further and doubts about the semiconductor cycle are dispelled, adding that he expects the Kospi to remain range-bound in the near term.

The Kospi is still up roughly 59% for the year, making it one of the best-performing major indices globally, supported by corporate buybacks. However, headwinds persist, with expectations of further rate hikes by the Federal Reserve likely to weigh on growth stocks. Kang Song-chul, an analyst at Eugene Investment & Securities, noted that market momentum is fading, as rising domestic interest rates shift investor preferences toward rate-linked savings products, reducing the relative appeal of equities.