The Korea Exchange halted trading on both the Kospi and the smaller Kosdaq indices for 20 minutes — a mechanism that automatically freezes the entire market for a fixed period once an index falls by a set percentage in a single trading session. The first to trigger the trading halt was the Kosdaq: at 12:19 local time, the index fell by 56.85 points, or 8.05%, to 649.00. Thirteen minutes later, the Kospi followed, dropping 491.33 points, or 8.15%, from Tuesday's closing level (6,023.66), reaching 5,532.33 at 12:32.
This marked the first time in the history of the Korean market that an index triggered the circuit breaker mechanism for two consecutive trading days. This collapse followed the eighth circuit breaker activation of the year on Tuesday, when the Kospi plummeted 8.02% intraday and closed down 10.8% after news broke that a Chinese company had begun mass production of its own deep ultraviolet (DUV) lithography equipment, threatening the dominant position of Samsung Electronics and SK Hynix in the memory chip export market.
Local media attributed Wednesday's continued sell-off to the persistent weakness in shares of major semiconductor manufacturers, active selling by foreign investors, and ongoing concerns about supply and demand pressure from leveraged single-stock exchange-traded funds (ETFs), whose volumes surged sharply earlier this year.
Earnings Beat That Wasn't Enough
The sell-off intensified even as SK Hynix reported record profits. The chipmaker's shares plunged sharply on Wednesday despite a 557% surge in quarterly profit — a result that still failed to meet the elevated expectations investors on Wall Street and in Seoul had built for the stock after months of AI-driven demand for memory chips.
Bitcoin Bucks the Trend
On Tuesday, bitcoin closely tracked the sell-off in the Korean market, falling roughly 2.7% to around $63,000, as the initial Kospi drop coincided with rising odds of a Federal Reserve rate hike and the delayed passage of the CLARITY Act, contributing to a wave of cryptocurrency liquidations. Subsequently, over the past 24 hours, the asset has climbed above $64,400, even as South Korea triggered its second consecutive 'circuit breaker'.
Wednesday marked the second time in a week that the cryptocurrency held its ground amid a sharp sell-off in AI-related stocks — a trend suggesting the tight correlation bitcoin had with semiconductor and AI company stocks may be weakening. Analysts typically describe the link between KOSPI swings and bitcoin's movements as a correlation driven by a common investor base rather than a causal one — and the divergence seen on Wednesday complicates that picture without providing a complete answer.
Samsung Electronics and SK Hynix remain the two stocks with the highest weighting in the index, meaning another leg down in chipmaker shares could easily trigger another circuit breaker before Korean markets get a chance to stabilize.
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