South Korea's KOSPI index plummeted 8% on Thursday, forcing a 20-minute trading halt as global technology stocks faced a massive selloff. Foreign investors withdrew 2.9 trillion won amid rising concerns over US inflation and cooling demand for AI-related assets.
The South Korean stock market experienced a severe drop on Thursday, with the KOSPI index falling 8% to 5,528.05. The sharp decline triggered a mandatory 20-minute trading halt, a safety measure designed to curb panic selling when market volatility exceeds specific limits. This is the tenth time this year the exchange has paused trading due to sudden price drops.
The selling pressure was concentrated heavily in the technology sector, mirroring a downturn in global chip markets. The Philadelphia Semiconductor Index, a key global indicator for chipmaker stocks, has also seen declines, affecting investor sentiment worldwide. Shares of major companies were hit hard, with Samsung Electronics falling 9.70% and SK Hynix dropping 11.35% as investors reacted to weakening demand expectations in the AI and semiconductor industries.
Foreign institutional investors were active sellers during the session, with net sales reaching 2.9 trillion won. This large-scale outflow put significant pressure on the South Korean won, which weakened to 1,348.2 against the US dollar. The exodus of foreign capital highlights a shift in market sentiment, as investors move away from tech-heavy, growth-oriented assets and toward more defensive positions.
Analysts have noted that the market is currently adjusting its expectations for technology revenue. While there was strong growth in AI-linked assets earlier, investors are now focusing more on tangible infrastructure returns rather than speculative future gains. The reduction in corporate buyback programs, which previously helped support share prices, has also left the market more vulnerable to sudden selloffs.
For investors, the immediate monitorables include US inflation data and its potential impact on interest rates, as global markets remain sensitive to macroeconomic shifts. The performance of major tech heavyweights will continue to influence index direction, while currency volatility remains a risk for foreign investments. Whether the market can stabilize will depend on how quickly investors recalibrate their expectations for semiconductor demand and how global central bank policies evolve in the coming weeks.