KOSPI Plunges 5.8% as Circuit Breakers Triggered Twice in One Week

[Anchor]

The KOSPI has been volatile throughout this week. Today, June 26, the index plummeted by nearly 6% as major semiconductor stocks faltered. A circuit breaker, which temporarily halts trading, was triggered twice in a single week for the first time in history.

Reporter Lee Tae-gwon has the story.

[Reporter]

The KOSPI started the day in negative territory and quickly expanded its losses.

Following a sell-side sidecar, a circuit breaker that halts trading for 20 minutes was triggered again, just three days after the last instance.

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

This marks the fifth time a circuit breaker has been triggered this year, the highest number on record.

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

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

Foreign investors offloaded a net 4.6 trillion won worth of shares, dragging the index down.

The securities industry interpreted this as profit-taking to adjust the proportion of Korean stock holdings ahead of the end of the quarter.

[Interview] Hwang Soo-wook / Researcher at Meritz Securities: (For foreign investors) trades made today are settled in two business days, allowing them to adjust their portfolio weightings. A significant volume of selling pressure appeared today due 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.

[Interview] Kim Dong-won / Head of Research at KB Securities: The stock price growth rate was much steeper than the selling, which is why the proportion increased. However, selling pressure will likely continue for the time being. This acts as a factor that amplifies volatility when stock prices fall, as seen today.

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

Reported by Lee Tae-gwon | 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
※ Please note: This article was translated by AI and may contain errors.