South Korea $2 trillion stock rout breaks records as SK Hynix results disappoint

SOUTH Korean stocks plunged for a second straight session on Wednesday as Asia's once-blazing AI rally morphed into a brutal market reckoning, wiping as much as **$2.18 trillion** from Seoul’s equity market and leaving leveraged retail investors reeling. The benchmark KOSPI .KS11 index dived as much as **12.6%** before reversing some losses to close down **6%**, extending Tuesday’s near-11% rout and putting the market on course for its steepest monthly decline on record. The slide has erased almost **40%** of the index's value from a peak reached little more than a month ago. Volumes were light, suggesting buyers have evaporated from what just weeks ago was the hottest trade in global markets — buying the chipmakers raking in cash from AI investment. Much of that buying was done by small-time investors using borrowed money to increase their exposure, and that dynamic, which accelerated the rally, is exacerbating the selloff as brokers forcibly shut down losing positions. Even blockbuster earnings from SK Hynix 000660.KS, which reported a six-fold jump in profit, failed to stem the panic as the results lagged lofty expectations. The chipmaker's shares slumped nearly **20%** before recovering some ground, closing down **9.6%**, while Samsung Electronics 005930.KS fell as much as **14%** before trimming losses to **5.2%**. Together, the two chip giants account for more than half of the KOSPI’s market value and have exerted substantial influence over the market this year as traders seek a slice of the lucrative AI trade amid a shortage of advanced memory chips. Shares in Taiwan's TSMC 2330.TW, the world's biggest contract chipmaker, fell **3.5%** in Taipei. > "Hopes of the market rebounding today after a 10% plunge yesterday faded, triggering panic selling and forcing most stock investors to book losses," said Han Ji-young, an analyst at Kiwoom Securities. "Doubts are prevalent in the market that the current index level would not be the bottom." Despite the tumble, the KOSPI is up **41.5%** in U.S. dollar terms year-to-date, making it the best-performing major market this year. > "Today's price action suggests that the leverage within Korean equities remains high and a further unwind could be expected," said Asia-Pacific macro strategist Wee Khoon Chong at BNY in Hong Kong. Under pressure from lawmakers during a parliamentary session, Finance Minister Koo Yun-cheol apologised for the introduction of single-stock leveraged ETFs, saying they had not been considered carefully enough. He added that the government is reviewing market stabilisation measures, including adjusting regulation related to the funds, which some analysts have blamed for increasing the amount of leveraged trading in the Seoul bourse. > "It's certainly a very crowded trade which is being unwound," said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong. > "If you look at what is falling in the market, it has been the stocks in which you have the most leverage," he said. "It's very difficult to say when will this selloff end, but at the moment, it's definitely not the trade where we want to be."

South Korea $2 trillion stock rout breaks records as SK Hynix results disappoint

Market rout deepens in Seoul

SK Hynix and Samsung slide despite strong earnings

Finance minister apologizes as leveraged trades unwind

Related News

Nasdaq Trade Halt Continues <LAWR.O> Reason Not Available at 03:58 AM

Forex-Dollar eases ahead of Fed decision, Aussie falls after inflation data

Rescuers in Japan haul survivors from collapsed mall as earthquake toll rises to 13

Royal Caribbean Group <RCL.N>: Jefferies Raises Target Price to $305 From $300

Japan earthquake rocks chip and auto manufacturing supply chain in Kyushu