South Korea's KOSPI Plummets 10.84% in a Single Day, Second Largest Drop in History
The South Korean KOSPI index fell 10.84% in a single day to 6023.66 points.
Samsung Electronics dropped 13.39%, SK Hynix fell 14.65%, with foreign investors net selling approximately 50 trillion won.
The event triggered a global chip sell-off, with foreign capital leading the sell-off, while retail and institutional investors took over, putting pressure on semiconductor stocks and tightening overall market liquidity.
Source: Public Information
ABAB AI Insight
During the 2020 pandemic and the 2022 interest rate hike cycle, the KOSPI experienced single-day drops exceeding 8% due to the semiconductor cycle, triggering circuit breakers. Subsequently, it surged over 200% from the 2025 low to peak over 9000 points in June 2026, with Samsung and SK Hynix accounting for over 50% of the index weight.
Capital flows indicate continuous net selling by foreign investors, compounded by leveraged ETFs and margin calls, with resources shifting from overvalued memory chips to cash and defensive assets. The motivation stems from concerns over peak AI capital expenditures and intensified competition with the listing of China's Changxin Memory.
This resembles the 17% two-day drop during the 2008 global financial crisis and the market crash in March 2020, currently in a valuation correction phase following the AI theme expansion, with the industry shifting from euphoric pricing to profit realization pressure.
Essentially, this reflects a transfer of pricing power, where concentrated shareholding structures amplify the impact on a single sector, leading to rapid liquidity withdrawal from growth stocks, putting pressure on holders of high-beta assets while cash holders gain a relative advantage.
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