KOSPI Slumps Nearly 10% as Chip Selloff Triggers Trading Halt
Key Takeaways
- •The KOSPI fell 9.86% from Friday’s close after briefly dropping more than 35% below its June record high.
- •The Korea Exchange suspended trading in KOSPI-listed shares for 20 minutes after the index decline exceeded the 8% circuit-breaker threshold.
- •Samsung Electronics and SK Hynix were the main drag on the market, as both memory-chip makers fell sharply and account for nearly half of the KOSPI’s weighting.
- •SK Hynix’s U.S.-listed shares closed below their $149 IPO price for the first time on Monday.
- •Investor concern widened after Nvidia fell on Wall Street and reports about AI infrastructure financing and China’s chip expansion added pressure to semiconductor stocks.
South Korea’s KOSPI plunged nearly 10% on Tuesday as investors accelerated their exit from semiconductor stocks that had driven the market’s artificial intelligence rally.
The benchmark traded near 6,089, down 666 points, after falling as low as 6,031.38. The intraday low left the index more than 35% below its June record of 9,385.59.
The Korea Exchange halted trading in KOSPI-listed shares for 20 minutes at about 10:14 a.m. Korea Standard Time after the decline stayed above the 8% circuit-breaker threshold. It was the seventh market-wide circuit breaker activated in South Korea this year, underscoring how quickly a concentrated move in a few heavyweight names can spill into the broader market.
Sell-side sidecars had already suspended program trading on both the KOSPI and Kosdaq shortly after the open. Trading resumed after the circuit-breaker pause, but losses widened as foreign investors continued reducing exposure to technology shares.
Samsung and SK Hynix Lead the Chip Selloff
Samsung Electronics fell as much as 13.4%, while SK Hynix dropped as much as 14%. The two memory-chip makers account for nearly half of the KOSPI’s weighting, amplifying the effect of their declines across the broader index.
SK Hynix’s U.S.-listed shares closed at $143.02 on Monday, falling below their $149 initial public offering price for the first time. The Seoul-listed stock had already posted a record 15.4% drop earlier in July as investors unwound positions accumulated during its rapid AI-driven rally.
Tuesday’s decline followed another 10% KOSPI collapse in June that exposed leverage across Korean chip stocks. Retail demand for leveraged Samsung and SK Hynix products has magnified price swings as falling shares force funds and traders to reduce exposure.
China Competition Adds to AI Concerns
The selling spread across Asian semiconductor markets after Nvidia fell nearly 5% on Wall Street and investors questioned the financing behind large AI infrastructure projects.
Reports that Nvidia could provide a roughly $250 billion financial backstop for an OpenAI data-centre development added to concerns that chip suppliers may be helping finance the customers buying their hardware.
China’s ChangXin Memory Technologies also surged during its Shanghai debut after raising at least $8.6 billion. Investors focused on the company’s ability to expand production and compete with Samsung and SK Hynix in memory chips rather than its current earnings. Reports of progress on domestically produced deep-ultraviolet lithography equipment added pressure to Korean manufacturers, a reminder that the chip sector is being shaped not just by AI demand, but also by rising competition and faster domestic capacity building in China.
The KOSPI remained near 6,089 after trading resumed, down 9.86% from Friday’s close of 6,755.75.