Kospi, Kosdaq Sink More Than 5% on Semiconductor Peak-Out Fears

Sell Sidecars Triggered in Quick Succession

Kospi Market Cap Falls Below 6,000 Trillion Won

Fears that the semiconductor upcycle may have peaked hit South Korea's stock market. The Kospi and Kosdaq each tumbled more than 5%, triggering sell sidecars in quick succession, while the Kospi's market capitalization fell below 6,000 trillion won for the first time in seven weeks. Concerns over a slowdown in the artificial intelligence investment cycle, together with geopolitical risks in the Middle East, sparked heavy profit-taking in large technology shares.

The Kospi closed at 7,246.79 on July 8, down 5.35% from the previous session. Volatility remained elevated for a second straight day as profit-taking in large technology and semiconductor stocks dragged the benchmark lower.

The index opened at 7,452.48, down 2.66% from the previous close. It turned briefly higher early in the session and rose as much as 1.77% to 7,791.66. It then reversed and slid as much as 6.14% to 7,186.21, briefly falling into the 7,100 range. The selloff shrank the Kospi's market capitalization to about 5,931 trillion won. It was the first close below 6,000 trillion won since May 20, a span of seven weeks.

At 1:31 p.m., a sell sidecar was triggered in the main board as the Kospi 200 futures index dropped sharply. A sell sidecar on the benchmark market is activated when the Kospi 200 futures index falls more than 5% and stays there for at least one minute.

At 1:33 p.m., a sell sidecar was also triggered on the Kosdaq market. A Kosdaq sell sidecar is activated when Kosdaq 150 futures fall more than 6% from the reference price and the Kosdaq 150 index drops more than 3% from the previous trading day's final level, with both conditions persisting for at least one minute.

The Kosdaq closed down 5.56% at 785.00. It was the first time in about 10 months that the index traded below 800 intraday, since Sept. 4, 2025.

The sharp decline reflected growing debate over whether the semiconductor cycle has peaked, according to market analysis. Valuation concerns had been building in semiconductor and AI-related stocks that led the recent rally, while caution spread that the pace of industry improvement may fall short of market expectations.

Rising military tensions in the Middle East also weighed on sentiment. The geopolitical risk could fuel volatility in oil prices and exchange rates, adding uncertainty over foreign investor flows and the earnings outlook for South Korean companies.

Market safeguards kicked in, but nerves remained frayed. Program selling was only temporarily curbed, and investors stayed focused on changes in foreign and institutional flows as well as late-session selling pressure, with concerns over the chip cycle and external risks surfacing at the same time.

Brokerages viewed the drop as a deeper correction after a sharp short-term rally left stocks vulnerable just as external headwinds intensified. They also said the market's heavy concentration in semiconductor names helped spread volatility across the broader market once the leaders began to wobble.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com