A continued selloff in South Korean shares, especially heavyweight semiconductor stocks, has dragged the benchmark Kospi into a bear market.
The index tumbled 5.3% to close at 7246.79 on Wednesday, following the previous session's 4.9% fall. The Kospi has slid 23% from a recent high in June.
To reduce volatility, the Korea Exchange activated five-minute trading halts for the Kospi and the smaller tech-heavy Kosdaq market, which slumped 5.6% on Wednesday.
Among the top decliners were the world's largest memory-chip makers, which together account for more than half of the Kospi's market capitalization. Samsung Electronics and SK Hynix plunged 6.3% and 5.7%, respectively, following the previous session's losses of more than 6% for both stocks.
While defense and retail stocks have also retreated sharply, losses in chip stocks emerged as the primary concern at a Wednesday policy meeting between Finance Minister Koo Yoon-cheol, Bank of Korea Gov. Shin Hyun-song and senior financial regulators to discuss recent wild market swings.
"Volatility has increased as the market undergoes a correction driven by profit-taking, portfolio rebalancing by foreign and institutional investors following the recent rally, and concerns about the global artificial-intelligence outlook," the Ministry of Economy and Finance said after the meeting.
The meeting's participants said "the growing weighting of semiconductor stocks in the Kospi is acting as a factor contributing to increased volatility in the financial market," and pledged to closely monitor risks that could further destabilize the market, according to the statement.
The chip stock slump came amid lingering market jitters about the durability of the artificial-intelligence boom that has fueled a recent tech rally.
Samsung on Tuesday projected a 19-fold surge in second-quarter operating profit, beating street views and extending its run of record quarterly earnings since the final quarter of 2025 amid red-hot demand for chips to power AI infrastructure and applications.
The company's upbeat forecast, however, failed to ease investor concerns about a possible AI bubble. Some investors used the earnings beat to lock in gains rather than chase the stock higher. Despite Wednesday's fall, shares in Samsung are still up more than 130% this year.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
July 08, 2026 03:46 ET (07:46 GMT)
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