#KOSPITumblesOver6%TriggersTradingHalt

The KOSPI index opened 5% lower on Wednesday, then within minutes extended its losses to over 6%, marking one of its sharpest daily declines of the year. This triggered the Sidecar mechanism, activated by the Korean Stock Exchange following a 5% drop in the KOSPI 200 futures index. The mechanism halted scheduled sell orders for 5 minutes.

Semiconductor stocks bore the brunt of the decline. SK Hynix lost over 9% at the open, while Samsung Electronics fell more than 7%. This highlights the fragility of the AI and memory investment cycle, to which South Korean markets are highly exposed.

The sell-off wasn't limited to Korea. In Japan, the Nikkei index fell more than 2%, while memory maker Kioxia lost over 10%. Taiwan Semiconductors also similarly diverged negatively. This simultaneous movement is being interpreted as a reflection of the 5.6% drop seen in the Philadelphia Semiconductor Index (SOX) the previous day, mirroring the decline in Asian markets.

There are three main factors behind this market collapse. First, the US 30-year Treasury yield has risen to 5.33%, its highest level since 2007. Rising borrowing costs are directly putting pressure on highly valued technology stocks, which are priced in future profit expectations. Second, geopolitical tensions related to Iran are driving up oil prices, reigniting inflation concerns. Third, there are growing doubts about whether the massive spending by Big Tech companies on AI infrastructure will yield returns.

These developments occurred during a period of extreme volatility, with the KOSPI falling from a peak of 9,300 in June to a low of 5,200 at the end of July, before recovering to around 6,900 in August. With this latest decline, the index has once again fallen to the 6,500 level. This situation indicates that the market is still searching for a new equilibrium and that broader participation is necessary for the sustainability of the upward movement.

Morgan Stanley strategists suggest the index could move between 5,500 and 10,500, while maintaining their 9,000 target for June 2027. NH Investment & Securities expects volatility to decrease until the October earnings season and a gradual recovery towards the 10,000 level. The Jackson Hole meeting and the Fed's interest rate decisions will be critical in determining the market's direction in the coming period. For Gate users, this necessitates closely monitoring the impact of turmoil in traditional markets on crypto assets, particularly US bond yields and geopolitical developments.

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