South Korean shares crater to 3-month lows as investors shun chipmakers

SAMSUNG BIOLOGICS

20/07/2026 08:48

KOSPI falls 4.5%, lowest close since late April
Sidecar triggered on KOSPI, Kosdaq
SK Hynix, Samsung Electronics down over 4%
Hyundai hits mid-Jan lows on workers' strike
Updates to market close

    SEOUL, July 20 (Reuters) - South Korean stocks plunged on Monday, shedding more than 4% to their lowest close since late April, as investors rushed to unwind AI-driven bets and accelerate a selloff that has wiped out more than a quarter of the market's value in just a month.

        The sharp retreat in memory chipmakers highlights the market's growing dependence on SK Hynix 000660.KS and Samsung Electronics 005930.KS, while exposing mounting investor unease over a rally fuelled by highly leveraged bets in the two chipmakers.
The benchmark KOSPI .KS11 tumbled 4.5% to 6,516.27, its weakest close since April 24. The drop extended losses from its June 22 record high to more than 28%, extending a fourth straight week of declines and abruptly pulling back this year's sweeping gains fuelled by chipmakers.
SK Hynix, the world's leading AI memory chipmaker, and its rival Samsung each ended the day over 4% in the red. The two stocks make up more than half of the benchmark KOSPI index.

       Once a bystander in the AI boom, South Korea has emerged as one of the purest proxies for the global AI trade, making it particularly vulnerable as billions of dollars in margin-funded bets dictate and amplify violent market swings.

       Regulators last week announced 
    measures to curb volatility
     linked to leveraged ETFs, but Inki Cho, a senior financial market strategist at online trading platform Exness, warned that margin loan debt hovering near record highs poses a far greater threat.
"If SK Hynix or Samsung sees another sharp drop, forced selling from margin calls could overwhelm any circuit breaker the FSC puts in place," Cho said.
"The (FSC) measures are a step in the right direction but not enough on their own, and the debt overhang needs its own policy response."
Retail investors have been hard hit as easy access to single-stock leveraged funds triggered a frenzy of debt-funded investing. A university student in Seoul saw his nearly 300 million won fortune evaporate in just four weeks in May.

        Over the weekend, Citi cut South Korea to a tactical neutral after a year in the overweight category, citing heightened volatility rather than any deterioration in fundamentals.
Elsewhere in KOSPI, Hyundai Motor 005380.KS tumbled 6% to its lowest since mid-January as a union began a four-hour strike. Sister automaker Kia Corp's 000270.KS shares also fell 6.5%.
Market breadth was overwhelmingly negative, with 799 stocks falling versus 97 gainers among 914 traded issues. Foreign investors were net buyers of 515.3 billion won ($348.36 million).
In the currency market, the won was fetching 1,479.5 per dollar on the onshore settlement platform KRW=KFTC as of 0705 GMT, 0.42% higher than its previous close at 1,486.0. 


($1 = 1,479.2000 won)

 (Reporting by Sameer Manekar and Roshan Thomas in Bengaluru and Cynthia Kim in Seoul; Editing by Sherry Jacob-Phillips and Shri Navaratnam)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters Messaging: cynthia.kim.thomsonreuters.com@reuters.net))