South Korean stocks have experienced a sharp decline, with chipmaker share prices plummeting and capital rapidly exiting stocks that had benefited from the AI boom.
During early trading on Monday, South Korea's benchmark Kospi index tumbled as much as 8.8%, bringing its cumulative decline from recent highs to approximately 15%, potentially entering a technical correction phase. Samsung Electronics Co Ltd shares plunged up to 11%, while SK Hynix Inc shares tumbled 10%.
The sudden price drops triggered circuit breakers, leading to a temporary trading halt. The Korea Exchange held an emergency meeting on Monday to assess rising market volatility and discuss measures to ensure stable market operations.
Over the past several trading sessions, concerns about the AI rally overheating, coupled with macroeconomic uncertainty, have slowed the global tech stock advance. After previously leading global gains, the South Korean market's current decline is particularly pronounced, even though the Kospi remains up 77% year-to-date.
Foreign investors have been exiting in droves, net selling over $10 billion worth of South Korean equities last week alone. This has put pressure on the South Korean won, which fell to its weakest level against the US dollar since March 2009.
Hana Securities analyst Kim Doo-un stated that the South Korean market faces the risk of a "Black Monday," with factors such as currency instability, interest rate repricing, and profit-taking in the semiconductor sector occurring simultaneously.
On Sunday, the South Korean government announced a series of targeted measures aimed at supporting the won and pledged to crack down on speculative trading and other related activities.
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