South Korea’s stock market suffered another brutal sell-off on Wednesday, with the benchmark KOSPI extending its losses for a second straight session as investors fled AI-related shares, wiping as much as US$2.18 trillion off the market’s value.
The KOSPI plunged as much as 12.6% during trading, triggering a 20-minute trading halt before recovering to finish 6% lower. The decline followed Tuesday’s near 11% slump and left the index down almost 40% from the peak reached just over a month ago, putting it on track for its steepest monthly fall on record.
The latest slide was led by chipmakers after SK Hynix reported a six-fold increase in profit that still fell short of lofty market expectations. Its shares tumbled as much as 20% before closing down 9.6%, while Samsung Electronics ended 5.2% lower after at one point dropping 14%.
Analysts said the sell-off was intensified by the unwinding of heavily leveraged retail positions that had fuelled South Korea’s AI-driven rally in recent months.
Finance Minister Koo Yun-cheol apologised in parliament over the introduction of single-stock leveraged exchange traded funds, saying they had not been considered carefully enough. He added that the government is reviewing market stabilisation measures, including possible regulatory changes.
Frank Benzimra, head of Asia equity strategy at Societe Generale, said: “It’s certainly a very crowded trade which is being unwound.”
He added: “If you look at what is falling in the market, it has been the stocks in which you have the most leverage. It’s very difficult to say when will this selloff end, but at the moment, it’s definitely not the trade where we want to be.”
Despite the sharp correction, the KOSPI remains up 41.5% in US dollar terms so far this year, making it the world’s best-performing major equity market in 2026.
Reuters
