Kospi drops 9.99% in 2026, circuit breakers hit twice

A record run meets a sudden air pocket

South Korea’s stock market saw an unusually violent session as the benchmark Kospi swung from record levels to a near 10% intraday slide before stabilising. The move came amid a broader sell-off in technology and artificial intelligence-linked stocks across Asia, after weakness in US tech shares added pressure. At the worst point, the Kospi was down almost 10%, prompting market-wide circuit breakers and multiple trading halts. Bargain buying later helped the index recover part of the fall, but the day renewed questions about how long the AI-driven rally can remain orderly.

What happened during the sell-off

Reports described the Kospi plunging sharply soon after the open, with the drop deepening fast enough to force trading to be halted twice in one session. The day’s decline followed a weak Wall Street session where investors sold technology shares on concerns that US interest rates may stay higher for longer. In Asia, markets with heavy chip exposure were hit particularly hard as the selling spread. South Korea stood out because the index had just climbed to record levels a day earlier, making the reversal even more abrupt.

Circuit breakers and trading halts take centre stage

The Korea Exchange activated market circuit breakers that paused trading for 20 minutes, a step typically reserved for severe and rapid declines. One account said the Kospi’s slide triggered a 20-minute market-wide halt after chip heavyweights sank by double digits. Another report said the benchmark fell more than 8% at one point, bringing on a second halt during the same day. Separately, an additional report described a steep drop around the opening that also resulted in a 20-minute halt, highlighting how quickly selling intensified. Across coverage, the consistent takeaway was that volatility spiked sharply enough to disrupt normal trading.

Chip giants drive the index move

The sell-off was led by Samsung Electronics and SK Hynix, the memory chipmakers most closely tied to the global AI buildout narrative. Multiple reports said both stocks fell more than 12% at points during the session, while others cited declines of about 10.6% for SK Hynix and 8.2% for Samsung Electronics. The concentration risk is central to understanding the market’s reaction: Samsung and SK Hynix together account for more than half of the Kospi’s market capitalisation or weighting, according to the information provided. When both fell sharply in tandem, the index had little cushion.

Foreign selling versus retail dip-buying

Overseas investors were described as heavy sellers, offloading more than 4 trillion won (about $1.6 billion) worth of Kospi shares by midday. That flow mattered because foreign participation had been a key tailwind during the index’s record-breaking climb. Retail investors moved in the opposite direction, with reports indicating they bought into the decline as prices fell. Market participants also flagged the growing role of leveraged investment products as a factor magnifying intraday swings, adding to the speed of the sell-off.

AI rally jitters, stretched valuations, and leveraged products

A key theme across the reports was unease that the rally in chip-related shares had become overstretched and vulnerable to a reversal in sentiment. Analysts cited profit-taking and stretched valuations after the market’s rapid ascent, with the Kospi having set records in recent sessions. Another pressure point was the influence of leveraged exchange-traded funds tied to the chip giants, which were described as magnifying price swings. The country’s top financial regulator was reported to have expressed regret about having permitted high-risk leveraged single-stock ETFs linked to marquee chip names.

Spillover across Asia and early US signals

The sell-off was not confined to South Korea. Japan’s Nikkei was reported to have closed 3.6% lower, while SoftBank fell more than 10% in the same risk-off move, and other Asian markets such as Hong Kong, Taipei and Shanghai also saw heavy selling. US tech sentiment was also reflected in Nasdaq futures, which were cited as down around 2.5% at one point. The regional synchronisation underscored that the Kospi’s drop was linked not only to domestic positioning, but also to global tech risk appetite.

Where the index closed and how 2026 still looks

Despite a partial rebound from the day’s lows, the Kospi was reported to have ended at 8,203.84, down 910.71 points or 9.99%, after touching record levels a day earlier. Another data point cited the index sliding 8.2% to 8,362.24 during the session, reflecting the fast-changing levels as volatility surged. Even after the sharp fall, the index remained sharply higher for the year, with one report placing year-to-date gains at 94.67% and another describing a roughly 78%-83% rise in 2026. The dispersion in figures reflects different snapshots, but the shared message is that the market entered the week after an outsized rally.

Key facts at a glance

Why the episode matters for investors

The session highlighted how concentration in a small set of AI-linked semiconductor stocks can amplify index-level volatility. It also showed how quickly sentiment can shift when global tech selling intersects with domestic profit-taking and leveraged exposures. While bargain hunters helped limit the damage from the worst levels, the activation of circuit breakers and repeated halts signalled stress in market functioning. With regulators already acknowledging concerns around high-risk leveraged products, scrutiny of volatility drivers is likely to remain a focus.

Conclusion

South Korea’s Kospi suffered one of its sharpest recent declines, with multiple trading halts, as a global tech sell-off and heavy chip-stock selling reversed a record run. The next sessions will be watched for signs of stabilisation in Samsung Electronics and SK Hynix, and for whether foreign flows return after the abrupt bout of risk reduction.