KOSPI plunges 8% in 2026, triggers circuit breaker

What happened in South Korea’s market open

South Korean equities opened sharply lower on Monday, with the benchmark KOSPI index plunging more than 8% during the opening hour. The move triggered an emergency circuit breaker, halting trading for 20 minutes as selling accelerated in heavyweight technology names.

At its worst, the KOSPI sank as much as 8.8% early in the session, leaving the index down about 15% from its recent peak and putting it on track to enter a technical correction. After trading resumed, losses narrowed, with an update noting the index’s decline eased to less than 5% later in the morning.

The Korea Exchange convened an emergency meeting on Monday to assess volatility and discuss steps aimed at maintaining stable market operations.

AI chip leaders led the sell-off

The sharp drop was led by steep losses in the country’s key semiconductor stocks, reflecting a rotation out of artificial intelligence beneficiaries.

Samsung Electronics fell as much as 11% in early trading, with another update noting a roughly 10% plunge at the open. SK Hynix slid as much as 10% in the same period, while other figures in the reports put its decline around 8% to 9% in different trading windows.

In one account, Samsung Electronics and SK Hynix were described as together accounting for about 50% of the KOSPI’s market capitalisation, magnifying their impact on the index on a heavy down day.

Circuit breakers and prior volatility this year

Monday’s trading halt was described as the third emergency suspension in the calendar year. Reports also referenced earlier trading halts on March 4 and March 9, after the benchmark index dropped more than 8%.

Separate volatility controls were also used the prior week. On Friday, June 5, 2026, the Korea Exchange activated a sell-side “sidecar” after the index fell 5.1% by midday, prompting a five-minute program trading suspension.

These episodes underline how quickly index-level moves can force market-wide pauses when liquidity thins and selling becomes disorderly.

Global triggers: geopolitics and rate expectations

The sell-off unfolded against a broader risk-off tone. One report tied the move to Iran’s missile strike on Israel, which triggered selling across global risk assets. That same account said the Korean won fell to its lowest level since 2009.

Macro uncertainty also featured prominently. The stronger-than-expected May employment report was cited as a catalyst that intensified market bets on US Federal Reserve rate hikes, fueling concerns that higher borrowing costs could constrain investment tied to AI expansion.

Alongside those drivers, reports noted worries that the AI rally had overheated, contributing to weaker sentiment in global technology stocks over the past few sessions.

A regional tech-led sell-off

The weakness was not confined to South Korea. Asia-Pacific equities opened sharply lower, with Japan’s Nikkei 225 down about 3.4% in early trading and Taiwan’s weighted stock index dropping 5.4% at the open.

Taiwan Semiconductor Manufacturing Co. shares were reported down 5.7% at the open in that session, reinforcing how the semiconductor complex was central to the day’s risk aversion.

Another regional snapshot cited MSCI’s Asia equities gauge falling 1.6% as technology-heavy markets came under pressure.

US semiconductor cues: Broadcom guidance shock

The sharp repricing in chip stocks had been building. On Friday, June 5, South Korea’s KOSPI fell 5.54% to close at 8,160.59, after briefly dipping to 8,038 intraday and nearing 7% losses during the session.

That move was linked to a sharp drop in US semiconductor stocks following Broadcom’s earnings outlook. Broadcom’s guidance for next-quarter AI semiconductor sales of $16 billion came in below the market estimate of $17.2 billion, sparking renewed “AI bubble” concerns in the chip sector.

Broadcom’s stock fell 12.59% in a single day, while other US semiconductor names were also down, including Micron Technology (-7.74%), AMD (-3.56%), and SanDisk (-3.92%).

Foreign selling and local flows

Foreign investors were repeatedly cited as key sellers in the downturn, dumping heavyweight technology stocks amid fears the AI rally had gone too far.

In a separate session described in the reports, the KOSPI surged to an all-time high of 7,822.24 in the prior trading session, then rose as high as 7,999.67 shortly after the open before reversing to close at 7,643.15, down 2.29%.

According to the Korea Exchange figures quoted, foreign investors sold 5.43 trillion won ($1.65 billion) of shares and institutions sold 798.9 billion won, while retail investors bought 6.09 trillion won.

Key figures at a glance

Why this matters for AI-linked markets

South Korea’s stock market had been among the best-performing major markets globally this year, driven largely by AI-related shares and optimism around semiconductors. The abrupt reversal shows how quickly concentrated leadership can turn into concentrated downside when expectations reset.

The day’s moves also highlight how macro headlines and global semiconductor guidance can transmit into Asian markets, especially where benchmark indices are heavily weighted toward a small group of chipmakers.

What investors are watching next

The Korea Exchange’s emergency meeting signals official focus on market stability as volatility rises. Investors are also watching whether the rotation out of AI beneficiaries persists, and how global risk sentiment evolves following geopolitical shocks and shifting expectations around US interest rates.

For now, the market narrative remains centred on whether the recent AI-driven repricing is an overheating unwind or a deeper reassessment of near-term growth assumptions in the semiconductor cycle.