South Korea's stock market experienced a dramatic crash, driven by a concentrated exodus of retail investors and disappointing earnings from SK Hynix, which further dampened sentiment in the already fragile artificial intelligence sector.
The benchmark Korea Composite Stock Price Index (KOSPI) saw its maximum intraday loss reach 13%, with a cumulative two-day drop of approximately 20%. This marks the second consecutive trading session to trigger a circuit breaker. Earlier this year, the index led global gains, powered by chip leaders SK Hynix and Samsung Electronics. Now, the index is on track to record a historic monthly decline of roughly 35%.
The logic behind massive capital inflows into the chip industry is now being questioned by investors, as market optimism has quickly turned into panic, prompting many to cut losses and exit positions. As of midday trading, retail investors had net sold 1.9 trillion Korean won ($1.3 billion) worth of KOSPI-listed stocks, a stark reversal from the previous pattern of buying on dips during pullbacks.
"Investors are now just scrambling to get out. This scale of selling, especially the concentrated retail sell-off, is completely baffling. From both a technical and sentiment standpoint, this qualifies as an irrational sell-off," said Yoon Joonwon, a fund manager at DS Asset Management.
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