Kospi plunges 7.9% on 'semiconductor shock' as foreigners dump 5.69 trillion won

The Kospi tumbled more than 7 percent on Thursday, retreating to the 7,600 level as heavyweight semiconductor stocks collapsed. Samsung Electronics and SK hynix plunged roughly 9 percent and 14 percent, respectively, dragging the index lower, while foreign investors offloaded more than 5.6 trillion won ($3.6 billion) across both major markets. Sell-side circuit breakers were triggered on both the Kospi and Kosdaq during the rout.

The Kospi closed down 655.32 points, or 7.89 percent, at 7,648.09, according to Korea Exchange. It was the first time the index finished below the 8,000 mark since June 11, when it closed at 7,763.95 — a gap of 15 trading sessions.

The index opened down 370.31 points, or 4.46 percent, at 7,933.10, slipping below 8,000 from the opening bell. It briefly recovered above 8,100 as selling eased mid-session, but a fresh wave of sell orders in the afternoon pushed it as low as 7,616.33.

Semiconductor blue chips led the decline. Samsung Electronics, the country's largest company by market capitalization, closed at 286,000 won, down 28,500 won, or 9.06 percent. SK hynix plunged 373,000 won, or 14.57 percent, to finish at 2.19 million won. Other semiconductor and Samsung and SK Group core stocks also fell sharply: SK Square dropped 13.20 percent, Samsung Electro-Mechanics 12.65 percent, and Samsung Electronics preferred shares 7.73 percent.

The semiconductor selloff was triggered by concerns over an AI supply glut stemming from Meta. Reports emerged that Meta is exploring a cloud business that would sell excess computing capacity from its data center infrastructure to outside clients, stoking fears in the market that demand for AI computing resources may have peaked. After Micron, SanDisk and other U.S. semiconductor stocks tumbled on Wall Street overnight, profit-taking concentrated on domestic semiconductor heavyweights as well.

Selling pressure was intense. Foreign investors net sold 5.49 trillion won on the main Kospi market, while institutions net sold 114.6 billion won; retail investors were the sole buyers, absorbing 5.4 trillion won. On the Kosdaq, foreigners and institutions net sold 193 billion won and 348.6 billion won, respectively, while retail investors net purchased 526.9 billion won. Combined across both markets, foreign net selling reached 5.69 trillion won.

The Kosdaq also closed sharply lower, falling 62.63 points, or 6.74 percent, to 866.72 — its first close below the 900 level in four trading sessions. The deterioration in semiconductor sentiment spread beyond large-cap Kospi stocks to growth stocks across the Kosdaq, widening the losses.

As the selloff deepened, market safeguards were activated in succession. Korea Exchange triggered a sell-side circuit breaker on the main market at around 9:07 a.m. after the KOSPI 200 futures index fell more than 5 percent below the previous session's closing level for one continuous minute. At around 12:47 p.m., a sell-side circuit breaker was also triggered on the Kosdaq following sharp drops in both Kosdaq 150 futures and the spot index.

Most top-capitalization stocks ended lower. Hyundai Motor fell 1.13 percent to 482,000 won, Samsung Life Insurance dropped 4.26 percent to 370,500 won, and Samsung C&T declined 6.34 percent to 406,500 won. LG Energy Solution and Samsung Biologics bucked the trend, rising 1.72 percent to 354,000 won and 0.72 percent to 1.41 million won, respectively.

Market analysts largely view the plunge not as a sign that semiconductor earnings forecasts have turned, but rather as profit-taking that found its justification in Meta's supply-glut concerns after an overheated rally had built up pressure. However, given the heavy weighting of semiconductor stocks in the Kospi, analysts warn that continued volatility in Samsung Electronics and SK hynix could amplify swings across the broader index.