KOSPI Plunges 8% Triggering Circuit Breaker: 3 Causes of Semiconductor Stock Crash
The KOSPI index plunged over 8% triggering a circuit breaker amid the Nvidia shock and a 2 trillion won foreign sell-off. We analyze the causes of the decline in major semiconductor stocks like Samsung and the market outlook.
On July 28, 2026, the KOSPI index plunged over 8% during intraday trading, dropping below the 6,240 mark and triggering a Level 1 circuit breaker. A massive 2 trillion won sell-off by foreign investors and a sharp rise in the KRW/USD exchange rate dealt a significant blow to the market.
Nvidia Shock and AI Peak Controversy
The primary driver behind this crash is the 'Nvidia shock' that hit the US stock market. Doubts about the profitability of the AI ecosystem and controversies surrounding circular financing caused Nvidia's stock to drop by over 5%. This led to massive profit-taking across tech stocks on the Nasdaq, severely freezing investment sentiment for domestic tech stocks.
2 Trillion Won Foreign Sell-Off and Exchange Rate Topping 1,470 Won
As the preference for safe assets intensified, the KRW/USD exchange rate spiked sharply, breaking through the 1,470 won mark. This surge raised fears of massive currency exchange losses among foreign investors, triggering a massive 2 trillion won sell-off today alone. This created a vicious cycle that further accelerated the KOSPI's downward pressure.
Samsung Electronics and SK Hynix Plunge Over 9%
Adding to the bad news from the US, spreading concerns over shrinking global market shares for K-Semiconductors due to the upcoming IPO of China's CXMT caused both Samsung Electronics and SK Hynix to plummet by over 9%. The impact was particularly severe as the bad news broke while investors were largely holding back ahead of SK Hynix's earnings announcement scheduled for tomorrow.
Frequently Asked Questions (FAQ)
What are the conditions for triggering a KOSPI circuit breaker?
A Level 1 circuit breaker is triggered when the KOSPI index drops by 8% or more from the previous day's closing price and remains at that level for 1 minute. When triggered, trading in the spot, futures, and options markets is completely halted for 20 minutes, after which trading resumes via a single-price auction for 10 minutes.
How long will the bear market last?
In the short term, the market's direction will likely be determined by the US Federal Reserve's FOMC interest rate decision meeting this week, as well as the earnings announcements from Big Tech companies like Apple and Microsoft. Signals regarding potential rate cuts will be a key variable.