KOSPI was the worst-performing major benchmark, slipping 4.6% after recently scaling record highs

Most Asian stocks dropped on Tuesday as investors locked in profits from a powerful artificial intelligence-driven rally, with South Korean shares leading losses amid sharp declines in heavyweight chipmakers.

But investors remained cautious amid uncertainty over the durability of any agreement.

KOSPI was the worst-performing major benchmark, slipping 4.6% after recently scaling record highs.

The decline was driven largely by heavyweight semiconductor stocks, with SK Hynix Inc and Samsung Electronics Co Ltd each dropping around 5%. The selloff came just a day after SK Hynix overtook Samsung to become South Korea’s most valuable listed company, underscoring the extent of the recent AI-driven rally in chipmakers.

Investors appeared to be taking profits after a sharp run-up in valuations. The KOSPI had declined only twice in the previous seven sessions, leaving the benchmark vulnerable to a pullback as sentiment toward technology shares cooled.

Nikkei 225 slid 1.1%, while the TOPIX shed 0.8%, with chip-related and export-oriented stocks giving back some of their recent gains after both indexes touched record highs earlier this week.

Japanese purchasing managers index data showed both manufacturing and services activity picked up in June, although it also showed a sharp increase in input prices due to disruptions caused by the Iran war.

Chinese markets were mixed. The Shanghai Shenzhen CSI 300 declined 1%, while the Shanghai Composite was little changed as investors weighed expectations for further policy support from Beijing against concerns over slowing worldwide growth. Hang Seng index slid 0.5%, pressured by weakness in technology and electric vehicle stocks.

ASX 200 traded flat ahead of key inflation and labour market data due later this week. The releases are expected to provide new clues on the Reserve Bank of Australia’s policy outlook, after the central bank announced a pause in its rate hike cycle.