The benchmark KOSPI sees a steep decline as interest in chipmakers falls, with the market losing about $2.18 trillion over two sessions.

Key Takeaways

  • South Korea's equity market lost about $2.18 trillion over two days.
  • KOSPI fell up to 12.6% intraday, closing 6% lower, erasing roughly 40% of its recent peak.
  • Authorities are moving to curb single‑stock leveraged ETFs amid panic selling.

South Korean stocks have dropped for a second consecutive session, with Seoul’s equity market shedding roughly $2.18 trillion in market capitalisation. Tuesday’s decline continued on Wednesday, setting the stage for the steepest monthly fall on record.

AI‑driven rally loses steam

Investors are feeling the pain after a rapid pull‑back in chipmakers that had surged on AI‑related demand. “The stocks with the most leverage are falling hardest,” said Frank Benzimra, head of Asia equity strategy at Societe Generale. “It’s very difficult to say when this sell‑off will end.”

Why This Matters

BozokMedia analysis shows that the plunge could ripple through global tech supply chains, affecting everything from semiconductor production to AI‑driven services worldwide.

The market correction is deep, and timing the bottom remains highly uncertain.

Regulatory response

Finance Minister Koo Yun‑cheol apologised for the rapid rise of single‑stock leveraged ETFs and announced tighter limits, including a 20 % cap on individual exposure and higher transaction costs.

Did You Know?: Despite the recent tumble, the KOSPI is up 41.5 % in USD terms year‑to‑date, making it the best‑performing major market this year.

Frequently Asked Questions

  • What triggered the sell‑off? A sharp decline in AI‑linked chip stocks and concerns over leveraged ETF exposure.
  • What could be the broader impact? Continued volatility may dampen foreign investment and slow the rollout of AI‑related projects in the region.