KOSPI Index Plummets, Erasing Over $2 Trillion in Market Value

South Korea's KOSPI index experienced a severe decline, falling more than 8% in a single day, prompting a 20-minute trading halt. The index's market capitalization has now decreased by over $2 trillion since its peak in June, marking a drawdown exceeding 40%.

This downturn has significant implications, as it surpasses South Korea's projected annual GDP of approximately $1.9 trillion for 2025. The KOSPI's recent performance has also caused it to drop from the sixth to the tenth position among the world's largest stock markets.

The decline, dubbed “Black Thursday” by local media, was largely driven by the underperformance of major companies like Samsung Electronics and SK Hynix, which account for roughly half of the KOSPI's market capitalization. These two firms have contributed to 70% of the index's losses since June.

As the KOSPI closed at 5,554, the situation has been compared to previous market crises, with the current drawdown approaching the median decline of 43.7% seen during past financial turmoil. The Financial Services Commission of South Korea has called for an emergency meeting to address the crisis and ensure market stability.

Investors are increasingly concerned about the implications of rising inflation and tightening financial conditions, which could impact the demand for memory chips and the broader AI sector. The recent performance of the KOSPI has raised alarms, with analysts indicating that the market is currently more volatile than Bitcoin.