KOSPI Hits Circuit Breakers for 2 Consecutive Days, 3 Reasons for the 40% Crash
The KOSPI has triggered sell-side circuit breakers for two consecutive days for the first time in history, plunging 40%. We analyze the three core causes of the market panic and future outlook.
On July 29, 2026, the KOSPI index staged a panic market, plunging 40% in the short term as it triggered sell-side sidecars and circuit breakers for two consecutive days for the first time in history. Massive offloading by foreign investors and the weakness of leading semiconductor stocks overlapped, freezing investment sentiment in the domestic stock market.
3 Core Reasons for the Market Panic
- Controversy Over AI Semiconductor Peak and Simultaneous Decline of Leading Stocks: Even though SK Hynix reported record-high quarterly earnings, its stock price plummeted as concerns arose over AI infrastructure investments peaking out in the second half of the year. This led to a simultaneous decline in major semiconductor stocks, including Samsung Electronics, driving the index down.
- Geopolitical Risks and Foreign Investor Exodus: As the rapid rise of China's semiconductor industry and geopolitical risks reached their peak, foreign capital massively exited the domestic market. Although the exchange rate dropped slightly due to exporters' dollar selling, it was not enough to stem the tide of foreign selling.
💡 Key FAQ
Q1. What is the difference between a circuit breaker and a sidecar?
A: A sidecar is a temporary measure that suspends program trading quotes for 5 minutes when futures prices fluctuate rapidly. In contrast, a circuit breaker is a stronger market stabilization mechanism that halts all stock trading for a certain period when the spot index itself falls significantly (8%, 15%, 20%).
Q2. When is the KOSPI expected to rebound?
A: While a technical rebound due to the excessive short-term drop is possible, an improvement in foreign supply and demand and positive earnings reports from US big tech companies are essential for a trend reversal. A conservative approach is recommended in the short term.
Q3. What is the 'US stock immigration' phenomenon?
A: It refers to the trend of retail investors, disappointed by the extreme volatility and repeated downturns of the domestic stock market, withdrawing their funds to directly invest in the US stock market, becoming what is locally known as 'Seohak Ants'.