On November 6, trading on the South Korean stock exchange had to be temporarily halted due to a sharp decline in quotations. The country's main stock index KOSPI lost more than 8% within minutes, triggering the automatic market protection mechanism against excessive fluctuations.
This was reported by the South Korean agency Yonhap, citing the exchange operator Korea Exchange (KRX).
Trading was halted at 9:03 a.m. local time for 20 minutes after KOSPI fell 8.52% to 4,924.61 points. This was one of the sharpest market plunges in South Korea this year.
According to Korea Exchange rules, the circuit breaker triggers if the index falls by at least 8% and remains at that level for a minute. The pause gives market participants time to assess the situation and is meant to curb panic selling.
The sell-off primarily hit large technology companies and semiconductor manufacturers. The stocks of Samsung Electronics and SK Hynix – two leading suppliers of memory chips for the artificial intelligence industry – were under the greatest pressure.
At the close, Samsung Electronics shares fell 6.35%, while SK Hynix lost 10.44%. The decline also affected automotive, defense, and financial companies.
By the end of the trading session, the South Korean market had partially recovered from the morning losses, but KOSPI closed 6.02% lower at 5,059.69 points. The index had already lost over 5% the day before.
The main reason for the sell-off was investor concerns about the prospects of the American artificial intelligence industry after the midterm elections to the U.S. Congress.
The victory of the Democratic Party, which gained control of both chambers of Congress, raised concerns about possible tightening of regulations on data center construction and restrictions on large investments in related infrastructure.
The previous day, November 5, these concerns caused a massive drop in U.S. stock indexes. The tech-heavy Nasdaq Composite lost about 5.5%, and the S&P 500 fell about 4.4%.
Negative sentiment quickly spread to Asian markets closely linked to global semiconductor and AI equipment production.
In Japan, the Nikkei 225 index closed about 6% lower, and in Taiwan, the TAIEX stock index lost about 4.5%. Tech stocks, particularly chipmakers and data center equipment manufacturers, were the hardest hit.
Analysts at Daishin Securities note that the investor reaction may be excessive. In their view, although the new composition of the U.S. Congress could slow down certain AI projects, a complete halt to data center construction is unlikely.
South Korean authorities stated their readiness to take measures to curb excessive volatility. Finance Minister Lee Hyun-il promised to strengthen monitoring of financial markets and respond promptly to risks caused by external factors.
