South Korea's stock benchmark plunged over 8% on Monday, tripping circuit breakers, after robust U.S. jobs data lifted bets on a Federal Reserve rate hike and unleashed a selloff in the tech‑heavy market that had powered the broader AI rally. The KOSPI (.KS11), opens new tab fell 8.3% to close at 7,484.41, marking its biggest daily fall since March 4. The index is now 15% below the peak of 8,801.49 hit on June 2.
Chip heavyweight Samsung Electronics (005930.KS), opens new tab tumbled 10.2%, and peer SK Hynix (000660.KS), opens new tab dropped 7.7% even as Nvidia's (NVDA.O), opens new tab CEO, Jensen Huang, said SK Hynix remained its "biggest partner" while unveiling new deals during his trip to South Korea. The two South Korean chipmakers have been the driving force behind the index's world-beating surge, buoyed by record profits. Their market capitalisations this year alone have jumped more than 150% and 200%, respectively, now accounting for over half of the benchmark and propelling them into the $1 trillion club. Circuit breakers were activated on the benchmark index soon after the market opened, halting trading for 20 minutes for the first time in three months, followed by another "sidecar" curb. It was the third time circuit breakers were triggered this year, and the ninth in history.
The won rallied more than 1% to 1,533.7 per dollar, rebounding from Friday's 1,615.0 - its weakest since March 2009 - after authorities convened an emergency meeting and vowed firm action against speculative trading. Foreign exchange officials on Monday renewed their warning, with traders suspecting authorities to be conducting dollar-selling intervention to cap the won's losses. "However, we will have to see if the 1,550 level will be defended," one trader said.
The selloff in stocks followed a torrid session on Wall Street on Friday. The Nasdaq (.IXIC), opens new tab fell 4.2% after strong payrolls data killed any hopes of further interest rate cuts, while the Philadelphia Semiconductor Index (.SOX), opens new tab slumped 10% and iShares MSCI South Korea ETF plunged 14%. "A surprise in U.S. employment data triggered bond yield rises and provided an excuse for correction in an overheated market amid accumulated pressure from the surge in semiconductor stocks," said Han Ji-young, an analyst at Kiwoom Securities.
The video player is currently playing an ad. You can skip the ad in 5 sec with a mouse or keyboard "Increased volatility is inevitable, but it is unlikely that the rout will go on for several days, given that the KOSPI's valuation pressure has been lowered by recent correction and earnings momentum remains robust for semiconductor stocks," Han said. South Korea's benchmark 10-year treasury bond yield rose as much as 12.3 basis points to 4.366%, the highest since October 2023. In a press conference marking his first year in office on Monday, President Lee Jae Myung, who has rolled out a range of policies to boost the domestic stock market since taking office in June 2025, said the market was "still undervalued." Lee described the current exchange rate as temporary and abnormal, pointing to foreign investors selling local stocks for portfolio rebalancing as the primary factor weighing on the won in the near term.
E-commerce firm Naver (035420.KS), opens new tab was a rare outlier among index heavyweights, rising 9.2% on a deal with Nvidia, while Hyundai Motor (005380.KS), opens new tab dropped 8.7% despite an agreement with the U.S. AI chipmaker to expand their partnership. Foreigners were net sellers of local shares worth 355 billion won ($231.40 million), extending their selloff to 21 consecutive sessions. Despite Monday's losses, the KOSPI is up 78% year-to-date. In 2025, it rose 76% for its biggest gain since 1999 and the top performance among major global markets last year.
