SEOUL, South Korea — South Korea’s benchmark KOSPI index plunged again Wednesday, falling 409.52 points, or 5.35 percent, to 7,246.79, extending a punishing two-day rout that has now wiped out a significant portion of the index’s extraordinary gains from earlier this year, as investors continued dumping shares in chipmakers Samsung Electronics and SK Hynix.

Wednesday’s decline followed an even more dramatic session Tuesday, when the KOSPI plunged more than 8 percent intraday and triggered South Korea’s sixth circuit breaker of the year, halting trading for 20 minutes after the index fell below key psychological levels in rapid succession. Tuesday’s session ultimately closed down 4.91 percent, but the selling resumed almost immediately Wednesday, with the index opening sharply lower and continuing to slide through the afternoon session, according to Korean market data.

The renewed selloff has come despite, and in some ways because of, historically strong earnings results from Samsung Electronics, the country’s largest company and a dominant force within the KOSPI index. Samsung reported preliminary second-quarter operating profit of 89.4 trillion won, or approximately $58.6 billion, a nearly 19-fold increase from the same period last year and a figure that exceeded consensus analyst estimates. Rather than lifting the broader market, the announcement triggered what traders described as a classic “sell the news” reaction, with investors concluding that expectations for the AI-driven memory chip boom had already been fully priced into share values well before the results were formally announced.

Samsung Electronics and SK Hynix, which together account for roughly 53 percent of the KOSPI’s total market capitalization, bore the brunt of the selling pressure across both sessions. On Tuesday alone, Samsung shares fell as much as 9.75 percent while SK Hynix tumbled 10.58 percent, with foreign and institutional investors net-selling a combined total exceeding 3.5 trillion won, or roughly $2.3 billion, even as retail investors stepped in as net buyers in an unsuccessful attempt to defend the market against the broader wave of selling. SK Square and Samsung Electro-Mechanics posted even steeper declines, falling 13.11 percent and 11.82 percent respectively during Tuesday’s rout.

Analysts at Samsung Securities pointed to three primary factors behind the sharp pullback. The first was straightforward profit-taking following an extraordinary run in memory semiconductor stocks, with Samsung Electronics and SK Hynix shares having soared 177 percent and 305 percent respectively during the first half of 2026. The second factor centered on growing concern that memory semiconductor companies may have already reached peak profitability, with some investors betting that year-on-year earnings growth will slow in the second half of the year due to a high base-effect comparison against this year’s exceptionally strong results. The third and most significant factor, according to the firm’s analysis, involved broader doubts about the long-term sustainability of artificial intelligence infrastructure investment worldwide, with the delayed initial public offering of OpenAI and Meta Platforms’ expansion into cloud computing cited as additional negative signals weighing on sentiment toward AI-linked companies globally.

The scale of Tuesday’s volatility was reflected in South Korea’s fear gauge, the Kospi 200 Volatility Index, known as VKOSPI, which spiked to 85.88 during the session, a reading reflecting extreme investor anxiety. The tech-heavy KOSDAQ index also fell sharply, closing down 3.64 percent at 816.21, while South Korea’s won weakened against the U.S. dollar, settling at 1,524.20 won per dollar.

Tuesday’s circuit breaker marked the 12th such trading halt in South Korean market history and the first in seven trading sessions since a similar episode on June 26. According to the Korea Exchange, a Level 1 circuit breaker is triggered when the KOSPI falls at least 8 percent from the previous day’s close and remains at that level for one minute, automatically suspending trading in all stocks for 20 minutes to help cushion the market from severe shocks. A more severe Level 2 halt would be triggered by a 15 percent decline, while a full Level 3 shutdown of trading for the remainder of the day would require a 20 percent drop, thresholds Tuesday’s session did not reach.

The rout in South Korea has rippled across the broader Asia-Pacific region, contributing to declines in Japan’s Nikkei 225, which fell more than 2 percent Tuesday to 68,256.96, its steepest drop in weeks, as chip-related suppliers including Kioxia Holdings, SUMCO and Taiyo Yuden each fell more than 11 percent. Hong Kong’s Hang Seng Index and mainland China’s Shanghai Composite posted more modest declines of 0.51 percent and 1.26 percent respectively, suggesting the most acute selling pressure remained concentrated in markets with the heaviest direct exposure to memory chip and semiconductor equipment companies.

Despite the severity of the two-day selloff, some analysts have pushed back against the notion that the underlying memory semiconductor cycle has peaked. Samsung Securities said it does not believe the current AI investment cycle has run its course, forecasting that the market could demonstrate renewed resilience if major U.S. technology companies reaffirm their AI investment plans during upcoming earnings reports later this month. The firm noted that even after roughly 150 trillion won in net selling by foreign investors during the first half of 2026, the overall proportion of foreign ownership within the KOSPI has actually increased, from 36 percent at the start of the year to around 40 percent, suggesting continued underlying confidence in Korean equities among international investors despite the recent volatility.

The KOSPI’s dramatic swings this year have also been amplified by structural factors specific to the South Korean market. According to Finimize, margin borrowing in KOSPI shares stood at 29.7 trillion won as of the Friday before the selloff began, close to a late-June record, raising the risk that sharp declines could trigger cascading margin calls and forced selling, further amplified by daily-reset leveraged exchange-traded funds that mechanically sell more of the underlying stocks following steep down days.

Even accounting for this week’s sharp losses, the KOSPI remains up substantially for the year, having posted the strongest growth rate among major global stock indices during the first half of 2026, rising roughly 100 percent on the strength of robust memory semiconductor performance. Whether Wednesday’s continued decline represents a healthy correction within that broader rally, or the start of a more prolonged reassessment of AI-related valuations across the region’s technology sector, remains a central question for investors as they await further signals from upcoming earnings reports at major U.S. technology companies later this month.