South Korean stock markets suffered a sharp drop on Tuesday as investors took profits and sold key semiconductor stocks that had previously been the main drivers of the market's rise.
The Kospi index closed down 10%, with chip giants SK Hynix and Samsung Electronics each down more than 12%. The fall also forced the Korea Exchange to activate a circuit breaker mechanism for 20 minutes to ease selling pressure.
What began as risk-off activity following weakness in US technology stocks turned into a massive sell-off. Foreign investors reportedly sold more than US$2.5 billion of Kospi shares in a single trading session.
The selling pressure was also exacerbated by forced liquidation of positions by retail investors using margin loans and sales involving leveraged exchange-traded funds (ETFs) with high exposure to SK Hynix and Samsung.
Trading volume jumped sharply as transaction activity on the day rose 52% compared to the average of the past 20 trading days, according to Bloomberg data.
The fall highlights the increasing volatility in the South Korean market, which was previously one of the world's best-performing stock markets in 2026.
The Korean stock exchange has now activated its circuit breaker four times this year, compared to none in 2025 and just once in 2024.
Meanwhile, the Korean stock market volatility index jumped nearly 90 points, approaching the high recorded in early June.
