KOSPI Trading Halted for 20 Minutes: What Triggered the Sharp Sell-Off?

South Korea's benchmark stock market index, KOSPI, witnessed a sharp sell-off on Tuesday as investors rushed to book profits after a strong rally in artificial intelligence (AI)-related stocks.

The decline came just days after KOSPI crossed the 9,000-point mark for the first time in its history. Concerns over stretched valuations in AI-linked companies led to heavy selling across the market, particularly in Semiconductor stocks.

KOSPI Hits Lower Circuit, Trading Halted

The benchmark KOSPI index fell more than 8 per cent during Intraday trade, triggering the market's first lower circuit breaker.

As a result, the Korea Exchange imposed a market-wide trading halt for 20 minutes. Trading was suspended at 2:33 p.m. Korean Standard Time (KST) and resumed at 2:53 p.m. KST.

However, selling pressure continued even after trading resumed. Shortly after the market reopened, the index extended its losses and fell nearly 10 per cent during the session.

The decline marked one of the sharpest falls witnessed by the South Korean market since March 4, 2026.

Over 900-Point Fall in a Single Session

KOSPI, which had closed at around 9,114 points in the previous session, slipped to nearly 8,203 points during Tuesday's trade, resulting in a decline of more than 900 points.

The sharp correction erased an estimated 250 trillion to 260 trillion Korean won in market capitalisation.

Despite the steep fall, the broader trend remains strong. The index has gained around 6.8 per cent over the past one month and has delivered returns of more than 175 per cent over the last year.

Notably, South Korea's equity market recently overtook India to become the world's sixth-largest stock market by market capitalisation.

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Why Did the Market Fall?

The biggest drag on the index came from semiconductor giants Samsung Electronics Co. Ltd and SK Hynix Inc.

SK Hynix share price declined more than 12 per cent. Investor sentiment weakened after local media reports suggested that the company may reduce production of high-bandwidth memory (HBM) chips and focus more on higher-margin DRAM products.

Such a move could potentially reduce SK Hynix's dominance in the HBM segment, where competition from rivals including Samsung Electronics and Micron Technology Inc. continues to increase.

Samsung Electronics share price also fell more than 12 per cent during the session, adding significant pressure on the benchmark index.

Foreign institutional investors were major sellers and reportedly offloaded more than 2 trillion won, equivalent to approximately USD 1.3 billion, worth of shares. Domestic investors, however, stepped in to buy the dip and partially absorb the selling pressure.

Weakness in global technology stocks also weighed on sentiment. Recent declines in several technology companies in the United States have raised concerns that AI-related stocks could face a broader correction after their strong rally over the past year.

Why Samsung and SK Hynix Matter

Samsung Electronics and SK Hynix carry significant weight within the KOSPI index and play a crucial role in determining its direction.

According to market reports, the combined weight of the two companies in the index stood at more than 50 per cent as of June 1, 2026.

SK Hynix is one of the world's leading memory-chip manufacturers, specialising in DRAM and NAND flash semiconductors. The stock had gained for eight consecutive trading sessions before Tuesday's decline.

Samsung Electronics is also among the biggest beneficiaries of growing demand for AI-related chips and memory products.

Given their large representation in the benchmark index, sharp declines in these stocks often have a substantial impact on the overall performance of the South Korean equity market.