Kospi tumbles nearly 10% following massive tech sell-offs

Stocks tumbled nearly 10 percent on Tuesday as foreign investors dumped major semiconductor shares and other market heavyweights due to profit-taking, tracking overnight losses in U.S. technology stocks. The local currency weakened against the dollar.

After choppy trading, the benchmark Kospi plunged 910.71 points, or 9.99 percent, to close at 8,203.84. The index hit an intraday high of 9,175.45.

The Korea Exchange (KRX), the bourse operator, activated a circuit breaker at around 2:33 p.m. after the Kospi plummeted more than 8 percent from the previous session's close.

A circuit breaker is a mechanism that temporarily suspends trading in stocks and related derivatives to cushion the market from severe shocks during sharp declines.

It marked the fourth time this year and the 10th time on record that the KRX has halted trading of all stocks for 20 minutes.

Trade volume was heavy at 483.7 million shares worth 59.9 trillion won ($38.9 billion), with losers outnumbering winners 856 to 46.

Foreign and institutional investors sold a net 4.13 trillion won and 4.55 trillion won, respectively. Meanwhile, retail investors were net buyers, purchasing 8.58 trillion won alone.

Overnight, U.S. Vice President JD Vance said a "very good foundation" had been established for negotiations toward a final agreement with Iran, and mediators also reported progress in the talks.

Despite the diplomatic developments, U.S. stocks closed mixed, with the tech-heavy Nasdaq Composite falling 1.3 percent on renewed concerns over major technology companies.

Shares of SpaceX tumbled more than 16 percent after reports that the company is selling bonds as part of a major fundraising effort to support its AI initiatives.

"Valuation concerns have grown for major Korean semiconductor stocks after they repeatedly hit record highs in a short period, prompting heavy selling by foreign investors and increasing market volatility," said Seo Sang-young, an analyst at Mirae Asset Securities.

Seo added that the almost 1 percent decline in Nasdaq futures further dampened investor sentiment toward domestic chipmakers.

In Seoul, most large-cap shares ended in negative territory.

Chipmakers Samsung Electronics and SK hynix tumbled 12.31 percent to 310,000 won and 12.47 percent to 2.55 million won, respectively.

SK Square, the parent of SK hynix, fell 7.01 percent to 1.83 million won.

Samsung Electro-Mechanics, an electronic components manufacturing affiliate of Samsung Electronics, shed 9.6 percent to 1.99 million won.

Top carmaker Hyundai Motor decreased 12.05 percent to 511,000 won, and leading battery maker LG Energy Solution dipped 6.1 percent to 362,000 won.

The won weakened by 2.1 won from the previous session to trade at 1,539.1 won per dollar as of 3:30 p.m.

Yonhap