On the 26th, the KOSPI showed extreme volatility, sliding intraday from the 8,800 level to the 8,100 level. Following the 23rd, a circuit breaker was triggered again after three days. This is the first time in the domestic stock market that a circuit breaker was triggered twice in one week.
Amid concerns about slowing memory demand sparked by weakness in U.S. tech stocks and short-term profit-taking, analysts said half-year-end portfolio rebalancing widened the market's losses.
The KOSPI closed at 8,411.21, down 519.09 points, or 5.81%, from the previous session. Starting at the 8,800 level, the KOSPI deepened losses from early trading, giving up the 8,700 and 8,600 levels in turn, and at one point slid to the 8,100 level intraday. At 11:12 a.m., a sell-sidecar that briefly halted program trading quotes was activated, and less than an hour later a circuit breaker was also triggered.
Foreign selling pulled the index down. According to the Korea Exchange (KRX) and NEXTRADE (NXT), foreigners posted a net sale of 5.4 trillion won on the main bourse. Institutions also recorded a net sale of 4.5 trillion won. By contrast, individuals net bought about 9.6 trillion won, absorbing supply from foreigners and institutions.
Deteriorating investor sentiment toward U.S. tech stocks is cited first as the backdrop for the index plunge. Overnight, Apple announced price hikes for some products, citing expense pressure from rising memory prices. Apple shares fell more than 6%.
In the market, concerns spread that a surge in memory prices could dampen demand for IT products, leading to a broader deterioration in sentiment for semiconductor stocks. On top of that, short-term profit-taking after the KOSPI's nearly 9% rebound over the past two days added pressure, sending Samsung Electronics and SK hynix sharply lower.
The shock from Apple hit not only Korea's market but also Japan's Nikkei 225 and Taiwan's Taiex directly. The two indexes fell 4% and 3%, respectively.
News that OpenAI's initial public offering (IPO) could be delayed also weighed on the market. As concerns grew that the timing of AI investment recovery could be pushed back, caution increased across AI-related tech stocks, analysts said.
Heo Jae-hwan, an analyst at Eugene Investment & Securities, said, "The slump in Asia stocks appears to be due to weakness in big tech such as Apple, which raised product prices on semiconductor price pressures, and the possibility of an OpenAI IPO delay," adding, "Both issues reflect concern over concentration in AI and semiconductors."
However, many viewed the day's plunge more as a half-year-end supply-demand factor than a change in fundamentals. Because the domestic market uses a T+2 settlement structure in which stock sale proceeds are received two days later, there is an explanation that rebalancing flows from institutions and foreigners seeking to align portfolios for settlement on the 30th may have clustered on this day.
Hwang Su-uk, an analyst at Meritz Securities, said, "For Korean stocks to reflect sales in the June 30 settlement balance, trading on the 26th is effectively the last valid trading day," adding, "It appears foreign basket selling concentrated from the open, especially in accounts where Korea and semiconductor weights had expanded sharply after the recent surge."
He added, "If this is an adjustment driven by rebalancing, a large part of the issue will be absorbed in a day and, at the longest, may continue until the end of this month," noting, "Concerns about slowing AI demand or rising memory prices are merely variables the market attached; they do not signify a trend change in fundamentals."
Large-cap semiconductor stocks by market cap led the index decline. Samsung Electronics fell 5.3%, and SK hynix plunged about 8.36%. Defense stocks such as Hanwha Aerospace (-5.43%) and LIG Defense&Aerospace (-5.16%), and power equipment names such as HD Hyundai Electric (-7.05%) and LS Electric (-7.31%) also showed simultaneous weakness.
Lee Kyung-min, an analyst at Daishin Securities, said, "Large semiconductor stocks that had surged on the back of Micron's strong results reversed sharply in a day and led the index weakness," adding, "As market leaders faltered, risk-off sentiment spread across all sectors, with capitulation-like selling emerging."
Meanwhile, KOSDAQ also hit a new low for the year on a closing basis. The KOSDAQ index finished at 851.37, down 36.44 points, or 4.10%, from the previous session. While foreigners and institutions net bought 370 billion won and 310 billion won, respectively, individuals net sold nearly 700 billion won.
However, even as large-cap semiconductor stocks wobbled, semiconductor materials, parts, and equipment names (SoBuJang) showed relative strength, with PSK up 10.32% and Wonik IPS up 5.88%, marking a differentiated trend.