Black Tuesday for KOSPI: South Korea's stock market crashes 11%; Samsung, SK Hynix lead rout

South Korea's benchmark KOSPI index plunged on Tuesday as investors rushed to book profits in heavyweight semiconductor stocks following a sharp rally in recent months. The benchmark dropped 762.84 points or 11.29 per cent to hit a day low of 5,992.91. Even after the steep decline, the index remains up about 40 per cent on a year-to-date (YTD) basis.

The decline was led by semiconductor majors Samsung Electronics Co and SK Hynix. Samsung Electronics shares tumbled 13.58 per cent, while SK Hynix declined 7.47 per cent, dragging the broader market lower.

The sharp correction comes as South Korea's benchmark has become increasingly concentrated in semiconductor stocks, with Samsung Electronics and SK Hynix together accounting for more than half of the KOSPI's total market capitalisation.

According to Ravi Singh, Chief Research Officer at Master Capital Services, the selloff reflects investors booking profits after a strong run-up in technology stocks.

"South Korea's KOSPI index came under heavy selling pressure, extending its recent losing streak as investors rushed to lock in profits in technology stocks. The biggest drag came from semiconductor giants Samsung Electronics and SK Hynix, which witnessed sharp declines after concerns emerged over rising competition in the AI memory chip space and stretched valuations following a strong rally," Singh said.

He added that investors also turned cautious amid reports that Chinese chipmakers are narrowing the technology gap, raising concerns over future pricing power and earnings growth.

"The correction reflects a broader shift in market sentiment, with investors reassessing the pace of AI-driven demand after months of optimism. From a technical perspective, the KOSPI has slipped below an important support zone, reinforcing the ongoing downtrend. While the long-term AI theme continues to support the sector, near-term volatility is likely to persist until buying interest returns and key resistance levels are reclaimed," Singh further said.

The weakness in South Korea's equity market spilled over to other Asian bourses. Japan's Nikkei 225 declined 4.03 per cent, while China's Shanghai Composite Index fell 1.50 per cent. Hong Kong's Hang Seng index was down 0.03 per cent.