Article: The KOSPI slid 10.84% on Tuesday, its biggest single-day drop in almost five months, after a sharp sell-off in semiconductor stocks. The plunge triggered the market’s eighth circuit-breaker halt of the year and has regulators weighing tighter limits on retail-focused leveraged ETFs.
What sparked the plunge
Two home-grown chip giants bore the brunt of the sell-off. SK Hynix shares tumbled 14.7% and Samsung Electronics fell 14.4%, together accounting for more than half of the index’s weighting. The tumble mirrored a global slide in semiconductor equities, where investors are re-pricing exposure to a sector that has been hit by slowing demand and rising competition.
The index closed at 6,023.66 points, down 732.09 points, and slipped below the 6,000 mark for the first time since mid-April. On a monthly basis the KOSPI is now down 29%, eclipsing the 27% fall recorded in October 1997.
Who feels the pain
Foreign investors dumped roughly 5 trillion won of Korean equities, while domestic retail buyers added about 4 trillion won. The net outflow pushed the market lower, but the impact was uneven: only 36 of the 917 stocks that changed hands recorded gains. The rest added to the downward pressure.
The won edged higher against the dollar, ending the session at 1,462.5 per US $, a 0.2% appreciation. A stronger currency can squeeze exporters, adding another layer of concern for an economy heavily tied to overseas sales.
Chinese competition adds a new wrinkle
The day’s market stress coincided with the debut of China’s CXMT on its domestic exchange. Investors voiced unease that a state-backed Chinese chipmaker could erode market share for established players. Adding to the anxiety, reports surfaced that a Chinese firm has begun producing immersion DUV (deep-ultraviolet) lithography equipment—a key step in advanced chip manufacturing that has traditionally been dominated by a handful of foreign suppliers.
Regulators eye tighter ETF rules
The rapid swing in the KOSPI has drawn attention to single-stock leveraged ETFs, products that let retail investors amplify exposure to a specific equity. While they can boost returns when a stock moves in the desired direction, they also magnify losses and can exacerbate market volatility. The financial regulator is reportedly considering limits on how much a retail investor can allocate to these instruments, aiming to curb the feedback loop that can turn a sharp move in a heavyweight stock into a broader market tumble.