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[BUSINESS] · South Korea · 40 sources

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KOSPI index recovers after massive 40% selloff in AI chip stocks

South Korea's KOSPI index experienced extreme volatility following a massive selloff in July, which saw the index lose approximately 40% of its value from its June peak. This crash was largely driven by the rapid unwinding of leveraged retail positions in AI-related semiconductor stocks, such as Samsung Electronics and SK Hynix. The carnage peaked on July 28 with a single-day decline of 10.84%, a drop that erased over $2 trillion in market value and triggered several circuit-breaker halts.

In response to the high market volatility, South Korean regulators implemented measures to curb speculation. These included raising barriers to trading single-stock leveraged ETFs, temporarily halting new listings for such products, and tightening margin trading requirements.

By early August, the market showed signs of stabilization and a sharp rebound. On July 7, the KOSPI attempted a recovery, rising about 1% in early trading to reach approximately 6,415 points. During this session, Samsung Electronics and SK Hynix both saw gains, with Samsung rising roughly 2-3% and SK Hynix increasing between 0.6% and 2%.

Entities

AI spending · ASML Holding N.V. · Advanced Micro Devices Inc · Artificial intelligence (AI) sector · Foreign investors · KOSPI · KOSPI · KOSPI index · Korea Ministry of Finance · Nikkei 225 · Nikkei 225 · SK Hynix

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