South Korea’s stock exchange halted trading for 20 minutes yesterday as the country’s KOSPI index fell more than 8% in a single day. Since its June peak, its drawdown now exceeds 40%, worth more than $2 trillion in market capitalization.
Followed domestically the same way US investors follow the S&P 500 index, KOSPI’s rout has downranked South Korea’s AI-focused stock market from sixth to 10th among the world’s countries.
For scale, the loss tops South Korea’s entire annual economic output of about $1.9 trillion in 2025. It also exceeds the value of every BTC in existence, about $1.6 trillion.
Concerningly, KOSPI’s loss exceeds the assets of South Korea’s National Pension Service, the world’s third-largest retirement fund holding about $1.3 trillion worth of savings that have obviously shrunk alongside the stock market.
KOSPI closed yesterday at 5,554, down 7.6% on the day and extending consecutive daily losses to seven. Intraday, the index fell as much as 9.3%, enough to trigger its 10th circuit breaker of the year.
South Korean media dubbed yesterday “Black Thursday.”
With its drawdown exceeding 40%, the crisis is approaching the median decline of 43.7% recorded during the country’s previous market crises like Black Monday of 1987, Asian financial crisis of 1997, Dot-com of 2000, and Global Financial Crisis of 2008.
Taking stock of KOSPI’s Black Thursday
Incredibly, Samsung Electronics and SK Hynix, two AI chip companies, weight at roughly half of the KOSPI index’s market capitalization.
Due to their disproportionate underperformance in recent months, the same two companies have caused 70% of the KOSPI’s drawdown since its June peak.
July was the KOSPI’s worst month since the 2008 Global Financial Crisis, but October is already nearing the entire July loss and could be on track to perform even worse.
Read more: South Korea’s stock exchange has paused trading 38 times this year
Retail investors have amplified the wild ride with leveraged single-stock ETFs. The finance minister apologized for introducing those products.
Goldman compared this month’s sell-off to March 2020 and August 2011, the only two episodes in the last 20 years of KOSPI trading with selling this severe and no rebound day.
South Korea’s stock market entered the world’s top 10 in January by overtaking Germany at $3.25 trillion. By June, it climbed above $5 trillion to sixth place. It now ranks 10th.
The country’s Financial Services Commission chairman called an emergency meeting on Thursday. He instructed financial services firms to “maintain vigilance” and to “actively respond to ensure financial market stability and investor protection.”
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