Kospi enters bear market! What South Korea’s finance minister said after 20% crash

South Korea’s Finance Minister flagged the country’s heavy dependence on semiconductor stocks as the benchmark Kospi entered a bear market after falling 20% from its recent record high.

Kospi plunged another 6% on Wednesday to close at around 7,247, extending its decline from the record close of 9,114.55 hit on June 22. The index has now fallen more than 20% from its peak, meeting the technical definition of a bear market.

The selloff was led by semiconductor heavyweights, with Samsung Electronics shares tumbling more than 6%, while SK Hynix fell nearly 4%. The Kospi’s performance is closely tied to these two chip giants, which together account for nearly half of the index’s weight and have contributed roughly two-thirds of its gains this year.


South Korea’s Finance Minister Koo Yun-cheol on Wednesday said authorities would closely monitor risks that could further increase stock market volatility.

The finance ministry said market swings have intensified due to foreign and institutional investor profit-taking, portfolio rebalancing, and changing expectations around the global artificial intelligence sector. The comments came after Koo met with the central bank governor and heads of financial regulators.

“Increasing concentration in the semiconductor sector has become a factor raising financial market volatility, with the impact of fluctuations in the chip sector on the whole stock market growing,” the ministry said in a statement.

The comments came as the Kospi extended its losing streak to four consecutive sessions, during which it has declined around 10%.

“Supply-demand dynamics of the dollar-won market are expected to shift in the second half,” Deputy Finance Minister Moon Ji-sung said, adding that pressure from foreign investor profit-taking and portfolio rebalancing is expected to ease.

Foreign investors turn net sellers

Wednesday’s sharp fall came amid heavy selling by overseas investors following the market’s strong rally this year. Foreign investors were net sellers of South Korean equities worth 471.7 billion won ($311.68 million).

The selloff also mirrored weakness in US technology stocks. The tech-heavy Nasdaq Composite fell more than 1% as investors turned cautious on chipmakers amid concerns over AI spending and the sustainability of AI-related investments.

Shares of Intel, Micron Technology and AMD fell as much as 10%, while the Philadelphia Semiconductor Index dropped nearly 5%.

Kospi remains 2026’s top-performing major index

Despite the recent correction, the Kospi remains the world’s best-performing major stock index in 2026, having gained more than 68% so far this year. The rally was largely driven by investor enthusiasm for AI-linked semiconductor stocks.

Goldman Sachs remains positive on South Korea’s market outlook, citing improving earnings momentum across sectors beyond semiconductors.

“Incremental foreign inflows have already begun rotating toward other AI-related beneficiaries and industrials, and we expect this trend to continue as investors seek exposure to the broader AI supply chain and opportunities that are uncorrelated with AI,” analysts said in a note, as quoted by Business Insider.

(With inputs from agencies)

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