South Korea's KOSPI Tumbles Over 4% as Chip Stocks Extend Global Sell-off

South Korea’s benchmark KOSPI index plunged on Monday, playing catch-up with a sell-off in global technology stocks after local markets reopened following a long weekend. The decline was driven by significant losses in the country's heavyweight memory chip manufacturers.

Market Performance

The KOSPI index ended the session down 4.3% at 6,520.66 points, erasing early gains and trading near a three-month low. The move pushed the index deeper into the bear market territory it entered earlier in July, according to a report from Investing.com.

Key technology stocks led the losses:

• Samsung Electronics Co Ltd (KS:005930) fell 4.1%.
• SK Hynix Inc (KS:000660), another major memory chip producer, dropped 3.5%.

Chip Sector Under Pressure

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The slide in Korean chipmakers tracked a broader rout in the semiconductor sector from the previous week. Investors appear to be locking in profits from the industry's recent AI-fueled rally, questioning the sustainability of that growth amid stretched valuations and high capital expenditures.

Concerns over the future path of U.S. interest rates have also contributed to investor caution. According to a recent note from KB Securities cited by Investing.com, markets are increasingly evaluating AI-related investments based on their funding costs rather than just their long-term growth potential, adding pressure to equity valuations.

Broader Context

Despite the sharp pullback, the KOSPI has had a remarkable year. The index remains the world's best-performing major stock market in 2026, holding on to a year-to-date gain of 51%. Monday's trading reflects a correction as local investors reacted to negative sentiment that built up in global markets while South Korea was on holiday.