Full Breakdown
South Korean Market Plunges 10% as Chip Giants Falter and Leverage Sparks Volatility
6/24/2026, 12:15:51 AM
Tech-Heavy Selloff Triggers Record-Level Decline
On June 23, 2026 the KOSPI fell about 10% from its record high, its steepest one-day drop this year. Samsung Electronics Co. and SK Hynix Inc. each slid more than 12%, prompting the Korea Exchange (KRX) to halt trading for 20 minutes, the fourth circuit-breaker activation in 2026.
Lead-Up: Rally, Leverage and Outflows
The market had surged on AI-driven semiconductor optimism, reaching a fresh high on June 22. Margin debt rose to a June record 38.5 trillion won (? $25 billion). On the crash day foreign investors sold a net $2.5 billion of KOSPI shares, while retail investors bought a record 8 trillion won, highlighting the market’s retail-driven nature.
Key Players and Instruments
Samsung Electronics – down >12%. SK Hynix – down >12%; reported shifting from HBM4 to commodity DRAM. KRX – halted trading for 20 minutes at 2:33 p.m. after the index fell >8%. Leveraged ETFs – a 2× Samsung ETF lost >25%; products amplified swings. Retail investors – drove 52% higher-than-average volume.
Official Statements & Responses
KRX said the 20-minute halt followed its circuit-breaker rules after the index dropped >8% from the prior close. The Financial Services Commission regretted allowing leveraged ETFs tied to semiconductor stocks, warning that “their negative side effects have grown significantly.” Regulators said they are reviewing measures to curb excess leverage.
Criticism & Opposition
Analysts warned that a market dominated by highly leveraged retail investors is prone to abrupt swings. Alexander Redman (CLSA) called the move “inherently frothy” and “truly unnerving.” Kim Namho (Timefolio) said forced liquidation “kicked in around 2 to 3 p.m.”, accelerating the sell-off. Critics say the rapid rollout of leveraged ETFs without safeguards magnified the decline.
Conflicting Reports & Gaps
Bloomberg reports a 10% KOSPI fall; Reuters and CNBC note declines of >8% and >6% respectively. SK Hynix’s slide is quoted as >12% (Bloomberg) versus >6% (TradingKey). No comment was obtained from SK Hynix on the production shift.
Verbatim Quotes
- “The magnitude of the move had everything to do with the inherent frothiness of the Korean market because it’s now exclusively retail driven,” — Alexander Redman, CLSA
- “It looks like forced liquidation kicked in around 2 to 3 p.m., with sell orders accelerating the downside,” — Kim Namho, Timefolio Investment Management
- “This is a very sentiment-driven sector and the group tends to trade together on a day-to-day basis,” — Bill Northey, US Bank
- “A market drop, even with heavy volatility, is healthy and will provide entry points for other investors,” — David Kruk, La Financière de l’Echiquier
What’s Next
Regulators said they are reviewing stabilization measures for leveraged ETFs. Investors will watch Micron’s earnings on Wednesday for clues on memory demand. Ongoing volatility may spill into U.S. tech futures, which already fell after the Korean sell-off.
