Kospi crashes over 8% on tech hemorrhage, US rate woes; won rises after verbal intervention

South Korea’s Kospi index plunged 8.29% on Monday, closing at 7,484.41 after a third consecutive losing session, as investors dumped tech and semiconductor stocks amid fears over artificial intelligence profitability and potential US Federal Reserve rate hikes. The benchmark index hit a low of 7,442.73, with trading volume reaching 448.3 million shares worth 47.8 trillion won ($31.2 billion). Foreign and institutional investors sold off 355.5 billion won and 1.6 trillion won respectively, while retail investors bought 1.76 trillion won. The crash followed sharp losses on Wall Street, where the Nasdaq dropped 4.18% and semiconductor shares like Nvidia, Broadcom, and Micron fell by double digits. The Korea Exchange triggered a 20-minute circuit breaker early in trading and later suspended Kosdaq trading for five minutes after the secondary index fell over 9%. Market analysts attributed the sell-off to profit-taking in the semiconductor sector, which had surged recently, with Samsung Electronics and SK hynix leading gains. Samsung Securities noted that investor sentiment was overly sensitive to negative developments after an extended chip stock rally. The Kospi had risen to near 9,000 points last week from 5,000 earlier this year, driven by tech and semiconductor stocks. Major South Korean stocks suffered heavy losses: Samsung Electronics dropped 10.18% to 295,500 won, SK hynix fell 7.68% to 1.91 million won, and AI investment firm SK Square declined 11.13% to 1.12 million won. Hyundai Motor and LG Energy Solution also saw double-digit losses, while the won strengthened slightly after financial authorities intervened verbally following its 17-year low opening. Analysts warned of a challenging week ahead, citing upcoming US inflation data, SpaceX’s listing, and Oracle’s earnings as potential market risks. Geopolitical tensions, including strikes between Iran and Israel, further dampened investor risk appetite.