South Korea's KOSPI plunges amid AI‑driven semiconductor sell‑off and trading halts

On July 20‑21, 2026 the South Korean KOSPI index fell sharply, sliding to the low‑6000 range (around 6,530–6,640) and triggering sell‑sidecar mechanisms that suspended program‑order trading for KOSPI200 futures and KOSDAQ150 futures. The drop was driven by a sudden loss of confidence in AI‑related semiconductor demand after Chinese AI models such as Kimi K3 raised doubts about future memory‑chip growth. Samsung Electronics and SK Hynix each lost about 4 % of their share price, pulling the broader market lower.

The sell‑off accelerated a de‑leveraging wave: leveraged ETFs tied to the two chip giants shed roughly 75 % of their assets, and hedge‑fund and retail margin positions were cut dramatically. JPMorgan noted that the KOSPI had fallen about 28 % from its June peak, while market volatility breached 60 %, even exceeding Bitcoin’s volatility. Foreign investors withdrew over $1.1 trillion, largely from the two chip stocks, and regulatory bodies stepped in with tighter margin rules. Despite reports of strong contract wins for chip makers like Micron, sentiment turned sharply negative across the Korean market.