South Korea Kospi Index Enters Bear Market Following AI Sell-off

The benchmark Kospi index entered bear market territory on July 8, 2026, plunging 20% from its June peak. The index fell over 5% on Wednesday to close at 7,246.79, contributing to a total decline of more than 10% over two trading days. This crash brought the total market capitalization below the six quadrillion won threshold for the first time in seven weeks, while the tech-heavy KOSDAQ dropped below the 800 level. The volatility was severe enough to trigger the exchange's sell-side sidecar mechanism for two consecutive sessions.

Heavyweight technology stocks drove the decline, specifically Samsung Electronics and SK Hynix, which together comprise roughly half of the Kospi's market capitalization. Samsung Electronics saw its shares tumble despite reporting record second-quarter operating profits of nearly 90 trillion won. Investors are increasingly concerned that the semiconductor upcycle has peaked and that artificial intelligence infrastructure spending by U.S. firms cannot sustain current valuations.

The downturn mirrored losses on Wall Street, where the Nasdaq 100 and semiconductor stocks such as Micron, Intel, and AMD declined. Additional pressure on the South Korean market stemmed from heavy selling by foreign investors and geopolitical instability following U.S. airstrikes in Iran. In response to the volatility, KIWOOM Securities lowered its target price for Samsung Electronics from 430,000 won to 390,000 won.