The Korean KOSPI index has plunged nearly 20% over two days, triggering a circuit breaker and causing retail investors to panic sell.

(1) South Korea's KOSPI Index saw an intraday decline of up to 13% on Wednesday, with a cumulative two-day drop of approximately 20%, triggering the circuit breaker mechanism for the second consecutive trading day. This month's decline is expected to set a historic record of around 35%. Earlier this year, the index had led global gains thanks to SK Hynix and Samsung Electronics.(2) The sharp drop was mainly driven by a mass exit and reduction of holdings by retail investors, as well as disappointing SK Hynix earnings, delivering a double blow. The already fragile market sentiment in the artificial intelligence sector further deteriorated. Investors began to question the investment logic in the chip industry, turning market optimism quickly into panic, with funds cutting losses and fleeing en masse.(3) As of midday, retail investors had sold a net total of 1.9 trillion won (about $1.3 billion) worth of KOSPI constituent stocks — a sharp reversal from their previous buying-the-dip strategy during earlier corrections. Yoon Joonwon, a fund manager at DS Asset Management, said that selling of such a large scale was “completely incomprehensible,” calling it irrational from both a technical and market sentiment perspective.