Seoul, June 23, 2026, 17:25 (KST)
The KOSPI slumped 9.99% on Tuesday, marking its largest decline in over three months. The index lost 910.71 points to close at 8,203.84. A trading halt hit the broader market during the afternoon as investors sold off chipmakers, following a record AI rally and regulatory warnings.
Investors had waited for this move. The index crossed 9,100 for the first time on Monday, with Samsung Electronics and SK hynix driving gains. Reuters reported Samsung and SK hynix now account for over half the KOSPI’s market value.
The selloff is drawing attention as the previous rally shifted from chip earnings into a leveraged retail trade. South Korea’s financial regulator this week admitted it acted too quickly on approving leveraged single-stock ETFs linked to chip stocks. The funds aim to amplify daily moves in single shares.
The Korea Exchange halted trading at around 2:33 p.m. after the KOSPI dropped over 8% from the last close, according to Yonhap. Yonhap said this marks the fourth time the exchange has triggered a market-wide circuit breaker in 2024, and the 10th since records began.
Selling hit across the board, with chip stocks leading declines. Samsung Electronics lost 12.31% to 310,000 won. SK hynix fell 12.47% to 2.55 million won. Hyundai Motor was down 12.05%. LG Energy Solution finished 6.1% lower.
Foreign investors were net sellers of 4.13 trillion won and institutional investors sold 4.55 trillion won, according to Yonhap. Retail investors were buyers, picking up a net 8.58 trillion won. Total trade volume reached 483.7 million shares, with turnover at 59.9 trillion won. Decliners led advancers, 856 to 46.
CLSA chief equity strategist Alexander Redman told Reuters, “Volatility has blown out.” Redman said it was hard to explain the size of the move without strong retail involvement, adding, “retailers are in the driving seat.” Reuters
Lee Chan-jin, head of the Financial Supervisory Service, on Monday called the approvals for leveraged chip funds “prepared hastily.” The regulator is looking at stabilising measures after these products lifted borrowed equity investment to 60 trillion won by end-May. Reuters
The won also came under discussion. Finance Minister Koo Yun-cheol said at a cabinet meeting that the currency trading in the mid-1,500s per dollar was “excessive” for South Korea’s fundamentals. He said some of the pressure was connected to overseas investors taking profits in Korean stocks. Reuters
SK hynix shares fell a day after the company overtook Samsung Electronics to become South Korea’s biggest listed stock by market value using common shares. SK hynix is a key producer of high-bandwidth memory, or HBM, used in AI servers. It supplies these chips alongside Samsung and Micron.
Kim Sunwoo, senior analyst at Meritz Securities, told Reuters in comments published by Investing.com that customised AI memory has changed the industry’s economics. SK hynix shares had climbed over 340% in 2024 ahead of Tuesday’s drop, boosted by AI demand from customers such as Nvidia and Google.
Losses spread outside Seoul. Japan’s Nikkei 225 dropped 3.6%. Hong Kong’s Hang Seng was down 2.1%. The Nasdaq Composite fell 1.3% in Monday trading as Big Tech names softened, according to AP. Neil Newman of Astris Advisory Japan said the market’s strength had “cooled off a bit.” AP News
MSCI came into focus. According to Investing.com, South Korean shares lost ground following news that the country would be left out of MSCI’s developed-markets index at the next review. Reuters had reported a day earlier that MSCI still saw Korea as missing core requirements, such as fully accessible offshore currency markets.
A straight unwind is still uncertain. After Tuesday’s plunge, the KOSPI remained up 94.67% on the year, Reuters said. Investors are weighing if this drop marks a pause in strong AI trades or signals forced selling from leverage, foreign outflows, and the weaker won.
