South Korea's KOSPI Plunges 5%, Triggering Circuit Breaker in Tech Selloff

South Korea's benchmark KOSPI index plunged as much as 5% in a bout of panic selling, triggering the exchange's 'sidecar' mechanism, which temporarily suspends programmatic sell orders to curb runaway declines. The rout was driven by a broad selloff in technology and semiconductor shares as investors reassessed how sustainable the surge in artificial intelligence spending really is, with disappointing guidance from a major US chipmaker souring sentiment across the region. The drop capped an extraordinarily volatile stretch for Korean equities: the index had rocketed higher in late July on optimism about AI demand and then whipsawed sharply, swinging between steep gains and losses on consecutive sessions. Heavyweights such as Samsung Electronics and SK Hynix, which had powered earlier rallies, led the retreat. Ratings agency Fitch noted that the equity-market volatility poses limited near-term credit risk, with securities firms most exposed but banks and insurers largely insulated given their limited direct equity holdings. The episode highlights how heavily South Korea's market has come to depend on the AI and chip narrative, leaving it vulnerable to sudden shifts in sentiment around global technology demand.