South Korean stocks experienced a significant drop of almost 10% on Tuesday, driven by foreign investors selling off major semiconductor shares and other key market players. This decline followed losses in US technology stocks, leading to profit-taking activities. The benchmark Korea Composite Stock Price Index (KOSPI) fell by 910.71 points, or 9.99%, closing at 8,203.84 after a volatile trading day.
The Korea Exchange (KRX) had to implement a circuit breaker around 2:33 p.m. as the KOSPI plunged over 8% from the previous session’s close. This marked the 10th time in history and the fourth time this year that the KRX had to halt trading for 20 minutes due to market conditions. Trade volume was heavy, with 483.7 million shares valued at 59.9 trillion won (US$38.9 billion), where losers outnumbered winners significantly at 856 to 46.
Foreign investors and institutional investors sold a net 4.13 trillion won and 4.55 trillion won, respectively, while retail investors were net buyers, acquiring 8.58 trillion won. The US Vice President JD Vance mentioned progress in negotiations with Iran, but US stocks closed mixed, with the Nasdaq Composite dropping 1.3%, sparking concerns over major tech companies.
Shares of SpaceX also faced a decline of over 16% due to reports of the company issuing bonds for fundraising to support its artificial intelligence projects. Analysts attributed the sell-off in major South Korean semiconductor stocks to valuation concerns, as they had been reaching record highs rapidly, leading to increased market volatility. This sentiment was further impacted by a nearly 1% drop in Nasdaq futures, affecting investor confidence in domestic chipmakers.
In Seoul, most large-cap shares ended in negative territory, with Samsung Electronics and SK hynix witnessing a significant drop of 12.31% and 12.47%, respectively. Hyundai Motor and LG Energy Solution also experienced declines of 12.05% and 6.1%, closing at 511,000 won and 362,000 won, respectively. The Korean won was quoted at 1,539.1 won per US dollar by 3:30 p.m., down 2.1 won from the previous session.
