South Korea’s benchmark equity index plunged more than 8% at the open on Monday, triggering an emergency trading halt as a hotter-than-expected US jobs report and AI bubble fears hammered semiconductor stocks for the second time in a week.
The Korea Exchange activated a Level 1 circuit breaker at 9:03 AM KST, suspending trading for 20 minutes after the KOSPI Composite Index fell 683.13 points, or 8.37%, to 7,477.46. Losses narrowed to approximately 6.6% after trading resumed.
Samsung Electronics and SK Hynix — which together drove the bulk of the KOSPI’s record-setting rally — both fell approximately 10% intraday. Samsung broke below the 300,000-won threshold while SK Hynix slid under 2,000,000 won. Hyundai Motor fell nearly 10%. Monday’s crash marked the second circuit breaker activation in four trading sessions.
US May nonfarm payrolls, released on Friday, came in at 172,000 — double the consensus estimate of approximately 85,000 — stoking concern that the Federal Reserve could raise interest rates before year-end. The report sent Wall Street’s semiconductor sector sharply lower: Nvidia fell 6.2%, Micron dropped 13%, and the Philadelphia Semiconductor Index plunged 10.3%, its worst single-day performance since March 2020.
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Those losses compounded the damage already inflicted by Broadcom‘s June 3 earnings report. Broadcom guided for third-quarter AI chip revenue of $16 billion — against the LSEG-compiled sell-side consensus of $17.2 billion — and declined to raise its full-year AI guidance despite first-half results that some investors had expected to justify an upward revision. A sidecar circuit breaker on June 5 had already halted program trading after the KOSPI fell 5.54%.
The KOSPI surged approximately 75% in 2025, driven by a global AI and semiconductor demand boom, before adding another 50% in the first months of 2026 to push above 8,900 points for the first time. Outstanding margin loans for stock purchases climbed to a record 36.47 trillion won (approximately $26.9 billion) by mid-May — roughly double the level from a year earlier — leaving a large cohort of leveraged retail investors exposed when sentiment turned.
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Overseas funds net sold Korean equities for more than 20 consecutive sessions beginning in early May, the longest such run since the 2008-09 global financial crisis, while domestic retail investors absorbed the outflows with borrowed capital. Cumulative foreign net selling on the KOSPI topped a record 103 trillion won for the year as of early June; foreign outflows reached approximately $1.21 billion in a single session during last week’s initial Broadcom-driven rout.
The Korean won was trading near the top of its 12-month range at approximately 1,503.96 won to the dollar, amplifying the cost of capital flight and feeding a feedback loop between equity losses and currency depreciation.
South Korean financial authorities pledged intervention measures without specifying details. Analysts noted the earnings outlook for Korean companies remains broadly positive, and that a deeper correction could present a buying opportunity.
Monday’s intraday low placed the KOSPI approximately 16% below its all-time high of 8,933.62, reached on June 2.
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