On the 13th, the domestic stock market staged an unprecedented panic session, with a sell-sidecar and a circuit breaker activated one after another during the day. The KOSPI plunged nearly 9%, breaking below 7,000 for the first time in about two months, and the KOSDAQ also fell below 800 intraday. Despite a successful debut for American depository receipts (ADR), SK hynix saw its common shares tumble nearly 15% intraday, amplifying the market shock.
The KOSPI closed at 6,806.93, down 669.01 points (8.95%) from the previous trading day. After giving back all the gains from the past two sessions, it also fell below 7,000 at the close for the first time since May 4. The index opened slightly lower and briefly reclaimed 7,500 early in the session, but as foreign and institutional selling intensified, the decline deepened in the afternoon.
At about 10:34 a.m., the main board triggered a sell-sidecar halting the effectiveness of program sell quotes for five minutes. Then, at about 1:28 p.m., with the KOSPI down more than 8% from the previous trading day for one minute, a level-1 circuit breaker (CB) was activated.
This was the seventh circuit breaker this year, with more than half of the 13 historical activations occurring this year. Volatility has surged, with five activations in just the past two months.
Flows showed foreigners and institutions leading the decline. According to the Korea Exchange (KRX) and NEXTRADE (NXT), foreigners were net sellers of 1.87 trillion won on the main board, while institutions sold a net 2.7 trillion won. Individuals bought a net 4.5 trillion won, absorbing supply, but it was not enough to prevent the index from falling.
Losses were pronounced among large-cap chipmakers. SK hynix(000660) fell 15.37%, losing the 1.9 million won level, and Samsung Electronics also dropped 10.7%. SK Square and Samsung Electro-Mechanics, grouped as Samsung Electronics and SK hynix-related stocks, likewise plunged 17%–18%. On the day, Korea Investment & Securities Co. also issued a report projecting SK hynix's second-quarter operating profit would miss market consensus.
Single-stock leveraged exchange-traded funds (ETFs) based on Samsung Electronics and SK hynix also all hit record lows since listing. "KODEX SK hynix Single-Stock Leverage" fell to 14,835 won intraday, the lowest since its May 27 listing. Other SK hynix single-stock leveraged ETFs fell as much as 32% intraday.
Samsung Securities' investment information team said, "Leveraged ETFs have a short-gamma structure that buys when prices rise and sells when they fall, which can amplify the underlying stock's volatility," adding, "Despite the recent decline, the combined market cap of Samsung Electronics and SK hynix single-stock leverage is above 10 trillion won, making volatility expansion from this factor unavoidable for the time being."
In the securities industry, the view was that profit-taking emerged after SK hynix's ADR listing, while burdens from second-quarter earnings expectations and external uncertainties—such as heightened military tensions between the United States and Iran—overlapped, sharply denting investor sentiment. Coupled with the domestic market's high semiconductor weighting and demand for leveraged ETF rebalancing, the sell-off deepened further, they said.
Lee Kyung-min of Daishin Securities said, "This year, the KOSPI had surged 212.34% at its intraday peak, building up overheating pressure and rally fatigue," adding, "In this context, negatives concentrated in the semiconductor sector that had led the gains, triggering a sharp drop."
Lee added, "Major global semiconductor companies also fell together, but the domestic market's semiconductor market-cap weighting exceeds 60%, so the shock was reflected more sharply."
The KOSDAQ also slipped back below 800. The KOSDAQ index closed at 799.36, down 38.07 points (4.55%) from the previous trading day. It briefly reclaimed 860 intraday but gave back most gains in the afternoon, finishing below 800 at the close.
On the KOSDAQ, individuals and institutions were net buyers of 265 billion won and 174 billion won, respectively, but foreigners sold a net 440 billion won, leading the index lower.
However, in the securities industry, the sharp drop in semiconductor stocks was interpreted as a normalization of overheated investor sentiment rather than damage to fundamentals.
Researcher Lee Kyung-min said, "This plunge reflects a partial reset of expectations for the AI industry, normalization of valuations, and concurrent deleveraging," adding, "In the domestic market, shrinking risk appetite and a vicious cycle in flows combined to widen the drop versus global markets."
Lee added, "The U.S. June consumer price index (CPI), out tomorrow, will be a short-term inflection point," forecasting, "If corporations' second-quarter earnings backstop the market thereafter, the KOSPI could resume its uptrend."