KOSPI Plunges 39% Below Record Peak as AI Chip Sell-Off Triggers Margin Liquidations

The Korea Composite Stock Price Index (KOSPI) dropped 3.5% at Tuesday’s open, cutting its 2026 gain to about 31% from roughly 116% at its June record close. The index now sits about 39% below that June peak, following a 22% loss in July and another 17% drop through October 16. Heavyweight memory chipmakers Samsung Electronics and SK Hynix, which accounted for 44% of the index in May, fell 19.74% and 28.38% respectively between October 1 and October 16. Stronger-than-expected US inflation data on October 15 caused the index to plunge 7.57% to 5,554.22 amid growing credit worries over AI spending at cloud providers. Margin loans peaked at 38.63T won on June 24, leading to a wave of forced liquidations that topped 50B won for four straight sessions through October 16 as traders missed payment deadlines. Institutional buying temporarily lifted the index 1.76% to 5,768.01 on Monday after a lower open, before Tuesday's slide resumed.