Full Breakdown
South Korean Market Slides as SK Hynix Earnings Miss Fuels AI-Driven Sell-off
7/29/2026, 8:16:23 PM
Market Collapse Tied to SK Hynix Results
On July 29, the KOSPI index fell as much as 13% in early trade, triggering a 20-minute circuit breaker for the second consecutive day. The session closed down 6%, extending Tuesday’s near-11% rout and setting up the steepest monthly decline on record, a 33% slide from the start of the month. SK Hynix shares plunged nearly 20% before recovering to end down 9.6%, while Samsung Electronics fell as much as 14% and closed down 5.2%. The broader market lost an estimated $2.18 trillion in equity value, erasing roughly 40% of the index’s peak reached a month earlier.
AI Rally and Leveraged Retail Exposure
The sell-off follows a rapid rally earlier in the year as investors chased AI-related chipmakers. Much of that buying was financed through single-stock leveraged ETFs, a product the Finance Ministry now says was introduced without sufficient review. Finance Minister Koo Yun-cheol apologized to lawmakers and announced a review of regulations governing those funds. Analysts note that the trade was “very crowded” and is now being unwound (Frank Benzimra, Societe Generale). Retail investors who used borrowed money to amplify exposure are being forced to liquidate positions as brokers close losing accounts.
Official Reactions and Policy Considerations
The government plans emergency measures to stabilize the market. Proposed actions include deploying a market-stabilization fund, encouraging the National Pension Service to rebalance into domestic equities, and providing liquidity through state-backed institutions (Jung In Yun). Lawmakers have called an emergency meeting to discuss the rout, and market participants suggest that such a fund could offer immediate relief.
Key Numbers
- Monthly decline: 33%
- Intraday KOSPI drop: up to 13%
- Total market loss: about $2.18 trillion
- SK Hynix fall: ~20% intraday, –9.6% close (both)
- Samsung fall: –14% intraday, –5.2% close
- Retail outflow: 2 trillion won (~$1.4 billion) sold on the day
- Year-to-date gain in USD: +41.5%
Verbatim Quotes
- “People seem to be just running away,” — Yoon Joonwon, a fund manager at DS Asset Management
- “SK Hynix is lifting capex to the high 40 trillion won range, while staying silent on shareholder returns and the pricing inside its long-term contracts, and that’s left investors feeling uneasy,” — Josh Gilbert, lead analyst for Asia Pacific and the Middle East at Etoro Ltd
- “It's certainly a very crowded trade which is being unwound,” — Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong
- “Hopes of the market rebounding today after a 10% plunge yesterday faded, triggering panic selling and forcing most stock investors to book losses,” — Han Ji-young, an analyst at Kiwoom Securities
These statements capture the panic among individual investors, concerns over SK Hynix’s capital-spending plans, the crowded nature of leveraged AI trades, and the fading hopes of a quick market rebound.
