South Korean stocks have yet to stabilize after a sharp decline. The Korea Composite Stock Price Index (KOSPI) has been fluctuating between 5% and 6% daily since its June high, indicating that market sentiment remains fragile.

The stock price has fallen by about 30% in less than a month.

Reports indicate that the KOSPI has fallen approximately 30% from its June high in less than a month. Even after this decline, the index is still about 25% lower than its June high, reflecting that selling pressure has not yet fully subsided.

Margin calls trigger a chain of sell orders

This round of decline has reportedly triggered margin calls for approximately 1.2 million trading accounts, with about 360,000 accounts being completely liquidated. The concentrated reduction of leveraged accounts has further amplified selling pressure in the market, keeping index volatility at high levels.

• Approximately 1.2 million accounts triggered margin calls.
• Approximately 360,000 accounts were completely liquidated.
• The index fluctuates by approximately 5% to 6% per day.

Concerns about AI spending weighed on chip stocks.

Concerns about a slowdown in AI-related spending significantly weighed on the performance of major South Korean tech stocks. Samsung Electronics and SK Hynix came under pressure, triggering a broader sell-off in the market.

Since the two companies have a high weighting in the South Korean stock market, the weakness in the related sectors not only affected the index performance but also exacerbated investors' concerns about subsequent volatility.