South Korea’s composite stock price index (KOSPI) has recently come under significant sell-off pressure. In the early session, it dipped by more than 4% at one point. The key trigger was a chain reaction of selloffs caused by technology stocks carrying an overly high weight in the index. Samsung Electronics and SK hynix together account for about 60% of the KOSPI index weight; both fell by more than 5% in the morning, directly dragging down the broader market.

This decline is the result of multiple factors converging:

- **Earnings outlook repricing:** The market is worried that AI computing demand may slow temporarily, and that memory chips such as HBM have not seen price increases as expected. Profit guidance from giants such as SK hynix came in below consensus, triggering profit-taking after the sentiment of “good news was already priced in.”
- **High-leverage stampede:** Many South Korean retail investors use financing and leveraged ETFs. When the index fell, it triggered forced liquidation, creating a negative feedback loop of “sell more the more it falls,” and even activating algorithmic circuit breakers multiple times.
- **Foreign capital withdrawal:** Affected by global high interest rates and valuation adjustments, U.S.-based and other foreign investors have continued to be net sellers. In early July alone, foreign investors had already recorded net selling of more than 12 trillion won, further intensifying liquidity tightening.

Although the Bank of Korea stressed that the fundamental situation—semiconductor supply should not be less than demand—has not changed, and SK hynix’s chairman also said AI demand will double, deleveraging and emotion-driven selling still dominate the market in the short term. Subsequently, the index’s decline narrowed to around 0.6%, indicating that at low levels there is a contest among funds for a rebound from oversold conditions. However, adjustment pressure on high-valued technology stocks remains in the medium term.