South Korean Stocks Crash 8% as Kospi Heads for Worst Week Since March

South Korean equities are in freefall this week, with the benchmark Kospi index crashing more than 8% and heading toward its worst weekly performance since March. The dramatic reversal has erased a staggering amount of market value in a single session, as one of the world's hottest AI-driven rallies shows fresh signs of running out of steam.

The Scale of the Crash

South Korea's KOSPI crashed more than 8% on June 23, triggering circuit breakers twice. The KOSPI opened at 9,083.54, down 0.34% from the prior close, then collapsed through the 9,000, 8,900, and 8,800 levels and all the way down to 8,500 in rapid succession. The Korea Exchange triggered a sell-side circuit breaker at 11:40 a.m., then activated a first-stage circuit breaker around 2:40 p.m. as the index sank to 8,375.31, an 8.11% decline on the day.

The financial damage from this single trading day was enormous. More than ₩366 trillion ($246 billion) in market value was erased, while Samsung Electronics and SK Hynix each fell about 9%. Foreign investors sold 2.5 trillion won ($1.6 billion) in early trading amid weaker sentiment toward AI-related stocks.

Heading for the Worst Week in Months

This isn't a one-day blip — it's compounding across an unusually brutal stretch. The KOSPI was set to lose nearly 10% this week, having tumbled sharply as investors locked in profits in high-flying chip stocks. South Korean stocks nosedived more than 8 percent in one session, extending their losing streak to a third consecutive session, as investors dumped market heavyweights — a pattern of sustained selling that's made this the worst week for Korean equities since March.

What's Driving the Selloff

A combination of weak leads from Wall Street and chip-specific bad news has hammered sentiment. Local stocks took a weak lead-in from Wall Street, with Apple Inc tumbling 6% after it hiked prices of several products over rising memory chip costs. Additionally, the New York Times reported that OpenAI was considering delaying its hotly anticipated public market debut to 2027, sparking increased doubts over the artificial intelligence trade.

South Korea's two chipmaking giants — which have driven the bulk of this year's gains — bore the brunt of the damage. Chipmaking heavyweights Samsung Electronics and SK Hynix were the worst performers on the index, falling over 9% each on Friday. The two fell as local media reports said Samsung planned to unveil a more than 1,000 trillion won ($646 billion) investment in chipmaking infrastructure over the next decade. The KOSPI's valuation has also become increasingly dominated by the two. Both firms — which manufacture memory chips — benefited greatly from outsized AI-driven demand over the past year, meaning any wobble in their share prices disproportionately drags down the entire index.

A Hawkish Fed and Regulatory Warnings Add to the Pressure

Macro and regulatory factors are compounding the chip-driven jitters. This AI-fueled rally hit some snags over the past week, especially after the U.S. Federal Reserve struck a hawkish chord during a recent meeting, leading to markets pricing in a potential interest rate hike by the central bank this year. Closer to home, the head of South Korea's markets watchdog also warned that the government may have been too hasty in approving leveraged funds tied to Samsung and SK Hynix, which ramped up volatility since their launch last month.

Still Up Massively for the Year

Despite the brutal week, it's worth noting how far the Kospi has climbed in 2026 overall. But despite its losses this week, the KOSPI was still trading up about 90% so far in 2026. The index remains the best-performing global bourse this year. The KOSPI remains up roughly 78%-83% year-to-date despite the recent selloffs, making it one of the world's best-performing major equity benchmarks in 2026. That context matters: this week's losses, however dramatic, represent a pullback from extraordinary gains rather than a collapse from a flat or negative starting point.

A Broader Asian Tech Selloff

South Korea isn't suffering alone — the entire region's most AI-exposed markets are taking a hit. Japan's Nikkei 225 broke an eight-session winning streak in a broad selloff driven by US technology stocks. The moves extended a turbulent stretch for Asian equities. Benchmarks in Taiwan, South Korea, and Japan had each climbed at least 40% this year, making the concentrated semiconductor trade the most exposed when US megacap sentiment shifted.

For continued, real-time tracking of how the Kospi and broader Asian equity markets are moving in response to AI-related volatility, the Reuters Asia Markets desk remains a leading source for live coverage as the situation develops.

What Lies Ahead

With the Kospi on track for its worst week since March and key catalysts — including upcoming US inflation data, Fed policy signals, and further developments in the broader AI capex debate — still ahead, investors will be watching closely to see whether this marks a healthy reset for an overextended rally or the start of a more sustained reassessment of South Korea's AI-driven boom. Given how concentrated the index has become around Samsung and SK Hynix, any further wobble in chip sentiment is likely to keep translating into outsized swings for the Kospi in the sessions ahead.