South Korea’s benchmark KOSPI index plunged 9.99% on Tuesday, closing at 8,203.84 as investors rushed to exit positions following an extraordinary record-breaking rally.
The sell-off was sharp enough to trigger a circuit breaker, prompting the Korea Exchange to suspend trading for 20 minutes after the index breached a decline of 8%.
Trading resumed but conditions failed to stabilize, and the index ultimately extended its losses to close just under the 10% threshold by the end of the session.
SK Hynix and Samsung, two of the world’s leading memory chipmakers, tumbled more than 12%, dragging the broader South Korean market sharply lower with them.
The two chipmaking giants account for roughly half of the KOSPI’s total market value, meaning their steep declines carried an outsized impact across the entire index.
The plunge was attributed to a combination of aggressive profit-taking, stretched valuations in AI and semiconductor stocks, and elevated leverage built up throughout the year.
Foreign investors compounded the downturn by selling nearly 5 trillion won worth of KOSPI shares in a single session, accelerating the pace of the decline considerably.
The KOSPI had surged more than 90% this year before Tuesday’s drop, meaning trading algorithms and momentum-driven investors were primed to exit quickly at any sign of reversal.
The fear in South Korea spread across the broader Asian region, with Japan’s Nikkei 225 falling 3.6% and tech giant SoftBank sinking 15% on the same day.
Most other Asian indexes fell more than 1%, while back in the United States the tech-heavy Nasdaq dropped 2.21% and the S&P 500 fell 1.44% as investors sold semiconductor and AI-related shares.
The Dow Jones Industrial Average, which carries less exposure to technology stocks, declined by a comparatively modest 0.1% during Tuesday’s broad market retreat.
By Wednesday morning, however, the KOSPI had already staged a meaningful recovery, bouncing back approximately 3% as buyers returned to the market with renewed confidence.
Samsung led the rebound, surging 7% and recovering a substantial portion of the losses it had suffered just one session earlier during the historic sell-off.
The swift recovery reinforced the view among some market observers that Tuesday’s plunge was a sharp but temporary correction within a larger and still-intact upward trend.
