South Korea’s benchmark Kospi reversed early gains on Friday, falling 1.35% after briefly surpassing the 8,000 level. The pullback came as broader Asia Pacific markets weakened, with investors closely watching the second day of high level talks between the United States and China.

The decline extended across the region. South Korea’s Kosdaq dropped 2%, Japan’s Nikkei 225 lost 0.9% while the Topix was flat, and Australia’s S&P ASX 200 slipped 0.25%. Hong Kong’s Hang Seng index fell 0.39%, while China’s CSI 300 opened unchanged, reflecting a cautious market mood.

The Kospi’s recent rally had been driven largely by major technology stocks, particularly Samsung Electronics, which recently surpassed a 1 trillion dollar market valuation. Earlier this month, the index crossed the 7,000 mark for the first time, highlighting strong momentum in the sector.

However, the surge has raised concerns about concentration risk. Samsung Electronics and SK Hynix accounted for over 42% of the index in May, underscoring the market’s heavy reliance on artificial intelligence and semiconductor stocks.

Investor sentiment had been supported by hopes that US China talks could ease tensions around trade and technology exports. This was especially relevant for chipmakers and AI related firms. Still, uncertainty remains as negotiations continue without clear outcomes.

Samsung Electronics shares fell 1% following updates on labor negotiations, with its union open to resuming wage discussions after early June. Meanwhile, geopolitical risks remain in focus, particularly around Taiwan, where rising tensions continue to influence global market sentiment.

In contrast, US markets moved higher. The Dow Jones Industrial Average reclaimed the 50,000 level, supported by strong earnings from Cisco Systems. The S&P 500 and Nasdaq Composite also posted gains, both reaching fresh record highs.

Looking ahead, Asian markets are likely to remain sensitive to geopolitical developments and policy signals. While technology continues to drive growth, concentration risks and global tensions may lead to increased volatility.