KOSPI Plummets 5.8% as Circuit Breaker Triggered for Second Time This Week

[Anchor]

Yesterday, the KOSPI plunged by 5.8%, triggering a circuit breaker that temporarily halted trading. This marks the first time in history that the mechanism has been activated twice in a single week.

Reporter Lee Tae-gwon has the story.

[Reporter]

The KOSPI started the day lower and quickly saw its losses deepen.

Following a sell-side sidecar, a circuit breaker was triggered for the second time in three days, halting trading for 20 minutes.

The index recovered slightly before the close, ending the day down 5.8% at 8,411.

This is the fifth time a circuit breaker has been triggered this year, the highest number ever recorded.

Concerns have emerged that major U.S. tech companies might slow down their AI investments due to deteriorating profitability, as Apple has raised prices for key products following a sharp rise in memory chip costs.

Samsung Electronics and SK Hynix plummeted by 5.3% and 8.3%, respectively. As these two stocks account for 56.5% of the KOSPI's total market capitalization, their decline heavily dragged down the entire index.

Foreign investors net sold 4.6 trillion won worth of stocks, further pulling the index down.

Analysts in the securities industry interpreted this as profit-taking to adjust the weight of Korean stock holdings ahead of the quarter's end.

[Hwang Soo-wook / Researcher at Meritz Securities: (From the perspective of foreign investors) trades made today (June 26) are settled two business days later, allowing them to adjust their portfolio weights. A significant amount of selling pressure today was related to that process.]

Although foreign investors have been net sellers for five consecutive months, their share of the total market capitalization has actually increased, reaching a record high of 35.3% last month.

[Kim Dong-won / Head of Research at KB Securities: The stock price growth rate has been much steeper than the selling, which is why the proportion has increased. However, selling pressure is expected to continue for the time being. When the market falls as it did today, this becomes a factor that amplifies volatility.]

With the market heavily concentrated in semiconductors, leveraged ETFs that reflect double the volatility are further fueling the unstable market conditions, leading to criticism that the current range of fluctuations is not normal for the market.

(Video by Park Jin-ho | Video Editing by Jung Yong-hwa | Graphics by Lee Jun-ho, Jang Seong-beom, Kim Han-gil, and Choi Jin-hoe)

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