KOSPI crashes 10%, rebounds 3.9% as Samsung plans $59B buyback

The KOSPI index fell 10% on Tuesday, triggering a circuit breaker, before rebounding 3.9% on Wednesday after Samsung announced a $58.6 billion buyback.

"Single-stock leveraged ETFs amplify volatility in concentrated markets," said Song Zhe, senior investment specialist at BNP Paribas Asset Management.

The Tuesday selloff erased more than 8% of the benchmark by 2:33 p.m. local time, prompting the Korea Exchange to suspend trading for 20 minutes. Samsung Electronics and SK Hynix each fell more than 11%, accounting for over 70% of the index decline. The rout spilled into global semiconductor names, with Micron Technology closing down 13% and Western Digital falling 8.5%. On Wednesday, the KOSPI swung from a 1.5% loss to a 3.9% gain, with Samsung surging as much as 10% on the buyback news before paring gains to 6.3%. SK Hynix recovered 1% after falling 4.5% earlier in the session.

The two-day swing underscores how South Korea's equity market has become a battleground between AI-driven demand for memory chips and a growing list of policy headwinds. The Bank of Korea warned in its Financial Stability Report that it may need to raise interest rates to address financial imbalances, citing rising household leverage and a deterioration in debt-servicing capacity among builders, petrochemical firms, and metals companies. Separately, MSCI declined to add South Korea to its developed market watchlist, citing limited won convertibility in offshore markets — a decision that pushes back expectations of index upgrades that could draw billions in passive inflows.

Adding to the uncertainty, a senior presidential policy official said South Korean semiconductor companies should share AI profits, a comment that triggered an intraday reversal in chip stocks on Wednesday. The KOSPI's volatility has surged to record levels, according to the Financial Times, as single-stock leveraged ETFs — introduced in late May — amplify price swings in the two stocks that dominate the index.

The competing forces leave the KOSPI in a news-driven regime where each data point, policy comment, or regulatory decision triggers outsized moves. Samsung's buyback details, the BOK's rate path, and any further policy signals on AI profit-sharing will determine whether the index can stabilize above its pre-crash levels.

This article is for informational purposes only and does not constitute investment advice.