KOSPI hits near 3-month low as 8% plunge triggers circuit breaker

South Korea's KOSPI index experienced a significant decline, plummeting to a near three-month low on Thursday, as a global technology sell-off intensified following higher-than-expected U.S. inflation. The benchmark index plummeted 8.2% to 5,514.96 points, marking its weakest level since late-July. The market decline has now cost the index 16.9% over the past week and 24.4% over three months.

The selloff was more severe than the declines seen in other Asian markets, with Japan's Nikkei 225 falling around 5% and Taiwan's Taiex slipping 3.4%. The market-wide circuit breaker mechanism was activated when the KOSPI fell 8% or more below its previous close for one minute, resulting in a 20-minute trading suspension. This was the 10th circuit breaker triggered this year and the 16th overall.

The sell-off came after U.S. consumer prices rose by 3.7% year-on-year in September, surpassing expectations and raising concerns about the Federal Reserve's potential to maintain tighter monetary policy for a longer period. U.S. stocks suffered as well, with the Nasdaq Composite falling 1.9% and the Philadelphia Semiconductor Index ending its six-session losing streak.

South Korean chipmakers were among the hardest-hit sectors, with Samsung Electronics declining 9.7% and SK Hynix falling 11.1%. Other steep decliners included Sanil Electric (-16.9%), Samsung Electro-Mechanics (-16.8%), Hansol Technics (-15.2%), Daeduck Electronics (-15.1%), and IsuPetasys (-14.9%). These losses underscored broader concerns about the viability of AI-related investments and the growing competition from Chinese memory-chip manufacturer ChangXin Memory Technologies, which has highlighted the risk of established manufacturers facing increased pricing and technology pressures.

The KOSPI's decline marks a significant reversal from the market's record highs above 9,000 points in June, fueled by optimism over AI-related semiconductor demand. Currently, the KOSPI is over 40% below its 52-week peak of 9,385.59, as investors reassess the valuations and earnings outlook for the largest tech companies in the region.