South Korea’s benchmark KOSPI suffered a near-vertical drop on Tuesday, June 23, plunging 10% – its steepest fall since March and one of the five largest single-day declines in the index’s history.
The slide was severe enough to trip a market-wide circuit breaker, freezing trading for 20 minutes.
For U.S. investors, the move showed up in the iShares MSCI South Korea ETF (NYSE:EWY), which fell 12.25% on Tuesday — a one-day drop the fund has registered only a handful of times in roughly 25 years.
By Wednesday morning, panic had flipped to relief: the index rebounded more than 2% at the open, led by a recovery in the very stocks that had dragged it down a day earlier.
Here’s what drove the swing, and why it matters for the AI trade.
A Market Held Hostage By Two Stocks
The proximate trigger came from overnight weakness on Wall Street, where AI and semiconductor names sold off and the Nasdaq Composite slipped as investors took a cautious stance ahead of Micron Technology Inc. (NASDAQ:MU)‘s earnings report this week.
But the reason Seoul fell harder than anyone is structural: Samsung Electronics and SK Hynix together account for roughly half of the KOSPI’s entire market value and have powered the bulk of its 2026 gains.
When both memory giants dropped more than 12% — Samsung down 12.31% and SK Hynix down 12.47% — the KOSPI index had nowhere to hide.
Several forces converged at once. Foreign investors offloaded close to 5 trillion won of Korean shares in a single session while domestic retail buyers stepped in with record purchases.
South Korea’s financial regulator had recently cautioned retail traders over heavy use of leverage, with margin debt sitting at an all-time high.
Samsung Announces Buybacks And SK Hynix Plans Nasdaq Debut
After the panic, then came a violent relief.
Samsung shares jumped more than 9%, reclaiming the title of South Korea’s most valuable company, after the Yonhap News Agency reported that the company is planning a share buyback program worth about 90 trillion won ($58.61 billion).
The other half of Korea’s memory duopoly is making headlines of its own. SK Hynix is seeking to raise roughly $29 billion by selling depositary receipts on the Nasdaq, with trading expected to begin July 10, according to Bloomberg — a move aimed at funding its expansion in AI memory.
It would put one of the world’s key suppliers of high-bandwidth memory for AI accelerators directly in front of U.S. public-market investors.
Both companies now sit inside the trillion-dollar club, at roughly $1.45 trillion for Samsung and about $1.19 trillion for SK Hynix in market capitalization.
What’s Next
The bull case on South Korea rests on a memory supercycle.
The AI buildout has created a shortage of the chips used to train and run large models, lifting prices and pointing Samsung and SK Hynix toward record profits this year and next, with long-term orders reportedly booked well into 2027.
The bear case is just as clean: memory is the most cyclical corner of technology.
Demand and pricing that look bulletproof today can reverse sharply when fresh capacity arrives or AI-infrastructure spending cools — and a market that draws nearly half its value from two highly correlated names carries concentration risk that cuts both ways.
The next catalyst is immediate. Micron Technology — the U.S. memory maker and a direct read-through for its Korean rivals — is due to report quarterly results this week, with investors watching for confirmation that AI-driven demand remains intact. A strong print could reinforce the supercycle thesis; a cautious outlook could reignite the valuation jitters that sparked Tuesday’s rout.
For now, June 23’s Black Tuesday looks less like the end of South Korea’s AI run and more like a violent reminder that, in the market’s most crowded trade, volatility is part of the deal.
Photo: Shutterstock
