KOSPI July 2026 crash

In July 2026, the South Korean stock market experienced a historic crash, with the KOSPI index plunging 22% in a single month, the steepest monthly loss since the global financial crisis. The sell-off was triggered by escalating Middle East tensions following U.S. strikes on Iran, concerns that the semiconductor super cycle may have peaked after a bearish outlook from Morgan Stanley, and a violent deleveraging of crowded retail trades in AI-linked heavyweights. Retail investors, who had piled about 78 trillion won into KOSPI shares in May and June, sold a record amount on July 31 despite an 18% rebound. The Korea Exchange activated sell-side sidecars multiple times, and trading was halted four times in the month, a record for circuit breakers. The government, led by President Lee Jae Myung, faced intense criticism for encouraging retail speculation through stock-market reforms and the introduction of single-stock leveraged ETFs, which were blamed for amplifying volatility. Authorities temporarily halted new listings of such ETFs and pledged additional stabilization measures, but many market participants felt these steps came too late. The crash hit major stocks hard: Samsung Electronics fell 21% in July, SK Hynix lost 35%, and other heavyweights like Hyundai Motor Company, KB Financial, and HD Hyundai Heavy Industries also declined sharply. In contrast, bio firms like Samsung Biologics — Samsung Biologics America and Celltrion rose on strong earnings. The South Korea — South Korean won strengthened slightly against the U.S. dollar. The AI boom that had fueled the rally remains intact, but investor confidence has been severely shaken, with many retail traders vowing never to invest again.