KOSPI closed at 6806.93 on July 13, down 669.01 points or 8.95% from the previous trading day, as the Korean stock market recorded its steepest decline for a comparable period since 2000. The index fell 19.7% in July's first nine trading days, driven by extreme volatility in semiconductor stocks and heavy selling by foreign investors (1.685 trillion won) and institutional investors (2.2194 trillion won), despite individual investors' net purchases of 3.8822 trillion won. The decline occurred ahead of the historically weak August-September period, when average monthly returns have been -0.5% and -0.7% respectively since 2000, typically influenced by post-earnings lulls and summer vacation-related trading volume declines.
KOSPI Records Worst July Decline Since 2000 Data Began
KOSPI dropped from 8476.48 on June 30 to 6806.93 on July 13, representing a 19.7% decline in July. Compared to the peak of 9114.55 recorded on June 22, the total decline reached 25.3%. The 19.7% drop in the first nine trading days of July marked the largest decline for that period since 2000, surpassing the previous record of 6.4% set in 2008. According to Korea Exchange data, individual investors purchased 3.8822 trillion won net on July 13, while foreign and institutional investors sold 1.685 trillion won and 2.2194 trillion won net respectively.
Historical Data Shows August-September Average Negative Returns
From 2000 to 2025, KOSPI's average monthly returns for August and September were -0.5% and -0.7% respectively. However, the pattern was not consistent across all years: among the 26 years examined, KOSPI rose in 15 Septembers and 12 Augusts. Major crisis events significantly impacted the averages—September 2000 saw an 11.0% decline during the dot-com bubble burst, September 2001 fell 12.0% following the 9/11 attacks, and September 2022 dropped 12.8% amid Federal Reserve tightening. Excluding the three worst-performing years, August and September average returns turned positive at 0.5% and 0.8% respectively.
Samsung Electronics and SK Hynix Concentration Reaches 58% of Market Cap
According to Eugene Investment & Securities, Samsung Electronics and SK Hynix accounted for 78.3% of KOSPI's gains in the first half of this year. The two stocks' combined share of KOSPI market capitalization reached 58% on June 25. Last week, while US Nasdaq and S&P 500 rose 1.7% and 1.2% respectively, KOSPI fell 7.6%, indicating Korea-specific structural vulnerabilities beyond seasonal patterns. The concentration in semiconductor stocks amplified the index decline when investor sentiment shifted.
SK Hynix ADR Listing and Leverage Unwinding Amplify Selling Pressure
SK Hynix's American Depositary Receipt (ADR) listing triggered profit-taking as the anticipated event materialized, while concerns emerged that second-quarter earnings might fall short of elevated market expectations. The semiconductor stock decline deteriorated investor sentiment, leading to leverage position unwinding. This created a negative supply cycle where additional selling emerged as leverage positions contracted, further expanding the decline. Kim Seok-hwan, researcher at Mirae Asset Securities, stated: "This SK Hynix plunge is closer to volatility adjustment reflecting simultaneous factors—the short-term ADR listing event conclusion, elevated earnings expectations, and leverage position unwinding—rather than damage to semiconductor industry conditions or mid-to-long-term profit direction."
Analysts Note Valuation Compression to Post-2008 Crisis Lows
Eugene Investment & Securities analyzed that KOSPI's 12-month forward price-to-earnings ratio (PER) fell to 6-7x, the lowest level since the 2008 global financial crisis. Han Ji-young, researcher at Kiwoom Securities, stated: "The recent sharp decline in the domestic stock market was largely due to the combination of semiconductor stock concentration and leverage-driven supply distortions. However, sentiment reversal can be created through US Consumer Price Index (CPI) and ASML-TSMC earnings announcements."
FAQ
What caused KOSPI to fall 19.7% in July's first nine trading days?
KOSPI fell 19.7% from June 30 (8476.48) to July 13 (6806.93), marking the worst decline for that period since 2000. The drop was driven by extreme volatility in semiconductor stocks, heavy net selling by foreign investors (1.685 trillion won) and institutional investors (2.2194 trillion won) on July 13, and the unwinding of leverage positions following SK Hynix's ADR listing.
How did KOSPI's performance compare to US stock markets last week?
Last week, US Nasdaq rose 1.7% and S&P 500 rose 1.2%, while KOSPI fell 7.6%. This divergence highlighted Korea-specific vulnerabilities, particularly the concentration of Samsung Electronics and SK Hynix, which represented 78.3% of KOSPI's first-half gains and reached 58% of total market capitalization on June 25.
What is KOSPI's historical performance in August and September?
From 2000 to 2025, KOSPI's average monthly returns for August and September were -0.5% and -0.7% respectively. However, excluding the three worst-performing years (2000, 2001, 2022), the averages turned positive at 0.5% for August and 0.8% for September, indicating that individual crisis events rather than seasonal patterns drove the historical weakness.
