- South Korea‘s KOSPI index fell more than 8% on “Black Thursday,” triggering a 20-minute trading halt and pushing its drawdown past 40% since June.
- The $2 trillion loss exceeds the country’s annual GDP and the total value of all Bitcoin in existence, which stands at about $1.6 trillion.
- Samsung Electronics and SK Hynix, two AI chip companies, account for roughly half of the index’s market cap and caused 70% of the drawdown.
- The crisis is approaching the median decline of 43.7% seen during previous Korean market crises like 1997 and 2008.
- The Financial Services Commission chairman called an emergency meeting, instructing firms to “maintain vigilance” and ensure market stability.
South Korea‘s KOSPI index crashed more than 8% yesterday, forcing the stock exchange to halt trading for 20 minutes and triggering what local media dubbed “Black Thursday.” Since its June peak, the index has lost over $2 trillion in market capitalization, a drawdown exceeding 40% that has knocked South Korea from the sixth to 10th largest stock market in the world.
For scale, the loss tops the country’s entire annual economic output of about $1.9 trillion, according to data. It also exceeds the value of every Bitcoin in existence, roughly $1.6 trillion, and surpasses the assets of South Korea’s National Pension Service, the world’s third-largest retirement fund.
KOSPI closed at 5,554, down 7.6% and extending consecutive daily losses to seven. Intraday, the index fell as much as 9.3%, triggering its 10th circuit breaker of the year.
The crisis is approaching the median decline of 43.7% recorded during previous Korean market crises like Black Monday of 1987, the Asian financial crisis of 1997, the Dot-com bust, and the Global Financial Crisis of 2008. Samsung Electronics and SK Hynix, two AI chip companies, weight at roughly half of the KOSPI index and have caused 70% of the drawdown since June.
July was the index’s worst month since 2008, but October is already nearing that entire loss. Retail investors amplified the volatility with leveraged single-stock ETFs, prompting the finance minister to apologize for introducing those products. Goldman compared the sell-off to March 2020 and August 2011, the only two episodes in 20 years with selling this severe and no rebound day.
The Financial Services Commission chairman called an emergency meeting on Thursday and instructed financial firms to “actively respond to ensure financial market stability and investor protection.”
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