Monday witnessed a significant downturn in South Korea’s primary stock index, marking its first trading day following Friday’s Constitution Day observance. The KOSPI plunged to an intraday low of 6,498 points before staging a modest recovery to settle near the 6,520 level.
This steep drop confirmed the index has fallen more than a quarter from its peak in June. The threshold officially marks a technical bear market designation, territory the benchmark first approached in early July.
Memory chip heavyweights Samsung Electronics and SK Hynix began Monday’s session with losses exceeding 5% apiece. The semiconductor giants ranked among the day’s poorest performers, with Samsung finishing approximately 4.1% lower and SK Hynix shedding roughly 3.5%.
Semiconductor equities have faced sustained headwinds over recent weeks. Market participants have been offloading memory and chip manufacturers to secure gains following an extended artificial intelligence-fueled uptrend.
On Friday, during Korea’s market closure, the Philadelphia Semiconductor Index dropped 4.3%. Even robust earnings from TSMC failed to halt the broader sector downturn.
Growing skepticism surrounding the sustainability of AI-related chip demand has pressured stock valuations. Investor concerns about elevated capital expenditure requirements throughout the industry have intensified selling activity.
Analysts at KB Securities recently observed that markets are currently pricing AI-related investments through the lens of funding costs rather than long-term expansion potential. The firm highlighted how climbing interest rates are amplifying stress on semiconductor valuations during this cycle.
Competitive threats from Chinese AI models have emerged as another headwind. Intensifying rivalry from China’s artificial intelligence sector has created additional downward pressure on memory chip stocks.
International investors entered the market during morning hours, accumulating a net 278.4 billion won ($187.1 million) concentrated in electronics shares. Domestic retail traders disposed of 300.8 billion won net during the corresponding period.
South Korea’s currency also experienced weakness, with the won-dollar exchange rate beginning at 1,488.3. Crude oil prices surged on concerns that intensifying US-Iran tensions might threaten traffic through the Strait of Hormuz.
A strengthening dollar intensifies import cost pressures throughout South Korea’s economy. The Bank of Korea’s first rate increase since 2023 has introduced additional economic strain.
Kiwoom Securities analyst Han Ji-young highlighted that Samsung Electronics, SK Hynix, and Samsung Electro-Mechanics have each declined between 30% and 40% from their respective peak values.
Notwithstanding the recent selloff, the KOSPI maintains its position as 2026’s top-performing global equity market, recording a 51% advance year-to-date.
Alphabet releases quarterly results on July 22, with Microsoft, Meta, and Amazon following later in the month. Investment guidance from these hyperscalers is anticipated to provide crucial direction for semiconductor stocks.
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