Kospi Plunges 11% on Chip Stock Rout as Trading Halts Hit Kospi, Kosdaq

South Korean stocks tumbled after selling intensified in semiconductor shares including Samsung Electronics Co. and SK Hynix Inc., prompting temporary trading halts on the Kospi and Kosdaq markets.

Bloomberg reported on July 28 that the Kospi dropped about 11% during the session. Samsung Electronics and SK Hynix each sank more than 13%, leading the index lower.

The Korea Exchange first suspended program trading after a sharp drop in stock-index futures. It then halted stock trading on the Kospi and Kosdaq for 20 minutes each.

The Kospi is down more than 30% from a peak reached about a month ago. Concerns that profits may not be enough to support heavy investment by global artificial intelligence companies, along with intensifying competition from Chinese firms, have weighed on the market.

“Investor sentiment toward South Korean semiconductor stocks has weakened drastically,” said Ha Seok-geun, chief investment officer at Eugene Asset Management. Broad risk aversion, forced deleveraging, wider credit-default-swap spreads for hyperscalers and worsening retail investor sentiment are all adding to selling pressure.

Losses also deepened for retail investors who bought leveraged exchange-traded funds tied to semiconductor stocks. Most of those products, launched in late May when share prices were near their peaks, have fallen more than 60% since listing.

The selloff followed a broad decline in global semiconductor shares a day earlier. News that a Chinese state-backed company had made progress in mass-producing some semiconductor manufacturing equipment also weighed on sentiment toward chip stocks.