Kospi Index plunged 4.6% as investors offloaded tech stocks amid fears of an overbought rally, with Samsung Electronics and SK Hynix Inc. shedding over 5% each. The decline triggered market safeguards when futures hit record lows, reflecting heightened volatility in South Korea’s chip-dominated market. Foreign investors sold $1.3 billion worth of Kospi shares in a single session, while retail traders added positions, amplifying the selloff. This sharp correction follows a month-long surge that pushed the index past 9,000 for the first time, despite geopolitical risks like the Iran conflict. Analysts note SK Hynix’s premium valuations relative to Samsung have made the sector particularly sensitive to profit-taking.

The selloff underscores growing unease about the sustainability of the tech rally, which has fueled Korea’s best-performing equity index this year. Samsung’s stronger-than-expected second-quarter profits could help stabilize the market, but SK Hynix’s reliance on memory chip demand leaves it more exposed to global headwinds. U.S. tech selloff amplified the move, with SpaceX shares falling and Micron Technology’s upcoming earnings seen as a key catalyst. Dilin Wu of Pepperstone Group emphasized that Micron’s results will directly impact Samsung and SK Hynix, determining whether the hardware-driven rally retains momentum. Regulators, including Financial Supervisory Service Governor Lee Chan-jin, are considering measures to curb risks from leveraged ETFs tied to these firms, which have exacerbated price swings.

Market participants are now questioning the resilience of the tech-driven upside. Retail leverage and margin balances at elevated levels have made the Kospi unusually reactive, Ha Seok Keun of Eugene Asset Management warned. The index’s recent record highs, achieved despite uncertainties, suggest a disconnect between fundamentals and investor sentiment. For now, the focus remains on Micron’s earnings later this week—a single data point that could either stabilize or deepen the selloff. Investors will likely reassess exposure to Korean tech stocks based on how the sector navigates this volatility, with Samsung’s relative strength potentially becoming a deciding factor.