South Korean shares led declines, with the KOSPI slipping around 4%

Asian stock markets were mixed on Monday, with South Korea sliding amid growing concerns over stretched AI valuations, and Chinese shares climbing on optimism over artificial intelligence developments.

Investors also monitored escalating tensions in the Middle East, which lifted oil prices and kept markets cautious over the outlook for central bank policies across the world.

South Korean shares led declines, with the KOSPI slipping around 4% after Friday’s worldwide rout in AI-related stocks.

Samsung Electronics and SK Hynix shares dropped almost 4%, each.

Technology shares came under heavy pressure after Chinese startup Moonshot AI unveiled its Kimi K3 large language model, positioning it as a lower-cost rival to Western AI models.

The release sparked concerns that intensifying competition could make it harder for leading AI companies to justify their rich market valuations, triggering broad-based profit-taking in semiconductor and AI-linked stocks.

Chinese equities, however, outperformed peers as investors welcomed Moonshot AI’s latest breakthrough.

Shanghai Composite index added 1.6%, while the blue-chip Shanghai Shenzhen CSI 300 jumped 2%. Hang Seng index tacked on 2.5%.

Technology stocks and chipmakers gained on expectations that China’s AI ecosystem could benefit from stronger innovation and greater competitiveness against rivals.

Hong Kong-listed Semiconductor Manufacturing International Corp shares climbed more than 4%, while Hua Hong Semiconductor soared over 6%.

Japan’s markets were closed for the Marine Day holiday.

S&P/ASX 200 edged up 0.2%, while Straits Times Index slipped 0.1%.

Futures tied to Nifty 50 dropped 0.4%.

Broader investor sentiment remained cautious amid continued military exchanges between Iran and U.S.

Iran struck U.S. across the region, while the latter launched retaliatory strikes. Tehran also continued attacks that threatened shipping through the Strait of Hormuz.

Oil prices jumped above $90 per barrel as traders assessed the risk of further disruption in the Middle East, with higher crude prices raising fears that inflation could remain sticky and complicate policy decisions by some of the world’s central banks.