Foreign investors sold ₩1.48 trillion as Samsung Electronics and SK Hynix led a semiconductor rout, reviving concern over leverage, forced liquidations and confidence in the AI memory-chip earnings story.
South Korea's benchmark KOSPI slid sharply on Thursday's (6th) session, triggering a sell-side SIDECAR (program trading curb) after futures tied to the KOSPI 200 fell more than 5% from the previous trading day and held that level for one minute. The Korea Exchange imposed a five-minute halt on program sell orders at 10:18:12 a.m., the second SIDECAR activation within six trading sessions and the first sell-side trigger since July 29. By 10:30 a.m., the KOSPI stood at 6,258.76, down 339.50 points, or 5.15%, from 6,598.26, extending a violent stretch in which the index had surged 17.91% on July 31 before falling 5.12% on August 3 and swinging back to a buy-side SIDECAR just one session earlier. The selloff was driven by heavy foreign outflows and a broad slide in semiconductor shares. Foreign investors were net sellers of ₩1.48 trillion in the morning, outweighing the ₩1.44 trillion in net buying from individuals and institutions combined. Samsung Electronics fell 6.50% intraday and briefly traded below ₩230,000, while SK Hynix dropped more than 9.35% at one point to ₩1.51 million after briefly touching its 30% daily limit down in thin pre-market trading on Nextrade. Weakness spread to SK Square, Samsung Electro-Mechanics and Samsung Electronics preferred shares, while the KOSDAQ also fell 2.25% to 781.56. Analysts said the scale of the decline looked disproportionate to the macro backdrop. Oil prices fell this week as Iran-Oman talks over reopening the Strait of Hormuz progressed, while the U.S. tech earnings season remained constructive, with Palantir cited as evidence that AI spending and demand remain firm. Even so, doubts over whether earnings expectations for Samsung Electronics and SK Hynix are too optimistic, combined with weakness in the Philadelphia Semiconductor Index and profit-taking after the recent rebound, helped push the market into a sector rotation phase. The recent turbulence also reflects an earlier build-up in leverage through margin trading and single-stock leveraged ETFs (funds that amplify daily moves), which has since unwound through forced liquidations. Goldman Sachs kept a bullish 12-month KOSPI target of 12,000, arguing that AI-driven memory demand could produce a "stronger and longer" earnings cycle and that the market is undervaluing a memory chip shortage that could last until 2030. But criticism has intensified over the market's volatility: Shuli Ren said South Korea is becoming an "uninvestable market," citing a roughly 40% drop from peak levels in 27 trading days and 33 sessions this year with moves greater than 5%. The near-term focus is whether foreign selling eases and whether semiconductor stocks can stabilize, because the SIDECAR mechanism can only briefly cool trading while the broader direction still depends on confidence in the long-term AI and memory-chip profit story.