SEOUL, July 08 (AJP) - A wave of panic selling triggered by fears that the AI chip boom may have peaked swept through Asia's technology-heavy markets on Wednesday, sending the KOSPI sharply lower for a second straight session and triggering sell-side sidecars on both the KOSPI and KOSDAQ as escalating Middle East tensions compounded the rout.
The benchmark KOSPI tumbled 5.35 percent to 7,246.79, while the tech-heavy KOSDAQ slumped 5.56 percent to 785.00.
The KOSPI opened 2.7 percent lower, briefly rebounded nearly 2 percent in early trading, then reversed course and fell more than 6 percent intraday before closing at its lowest level in seven weeks. The slide pushed the market's capitalization below 6,000 trillion won for the first time since May 20.
As stock index futures extended their losses, the Korea Exchange activated sell-side sidecars on the KOSPI at 1:31 p.m. and on the KOSDAQ two minutes later.
The two chip heavyweights remained at the center of the rout. Samsung Electronics fell 6.25 percent to 277,500 won, its lowest close since May 20, while SK hynix dropped 5.68 percent to 2,076,000 won, its weakest finish since June 5.
The selloff extended into a second day after Samsung Electronics reported record operating profit but weaker-than-expected revenue, reinforcing concerns that the semiconductor cycle may be nearing its peak. Those worries intensified after Morgan Stanley warned in a recent report that the memory market was approaching its peak growth rate.
Rebalancing by single-stock leveraged exchange-traded funds appeared to amplify the decline. Leveraged ETFs tied to Samsung Electronics and SK hynix fell between 10 percent and 13 percent, with all 14 funds trading below their 20,000-won listing price.
The weakness quickly spread across the broader market. SK Square fell 6.34 percent to 1.27 million won, Samsung Electronics preferred shares lost 6.22 percent to 186,900 won and Samsung Electro-Mechanics plunged 10.25 percent to 147,900 won, making it one of the day's worst-performing blue chips.
Most other large-cap stocks also retreated. Hyundai Motor fell 3.55 percent to 462,500 won, LG Energy Solution lost 4.97 percent to 315,500 won, Samsung Life Insurance slid 7.73 percent to 346,000 won, Samsung C&T dropped 6.95 percent to 395,000 won, Samsung Biologics declined 4.15 percent to 1.363 million won, HD Hyundai Heavy Industries fell 6.34 percent to 517,000 won, Hanwha Aerospace lost 7.22 percent to 1.041 million won, KB Financial eased 1.27 percent to 171,000 won and Shinhan Financial slipped 1.20 percent to 107,300 won.
Kia stood out as the lone major gainer, rising 2.02 percent to 156,800 won on expectations of stronger earnings supported by growing sales of eco-friendly vehicles.
Investor sentiment deteriorated further after military tensions between the United States and Iran intensified following attacks on commercial vessels near the Strait of Hormuz, adding geopolitical uncertainty to already fragile market confidence.
The Korean won strengthened sharply to 1,503.40 per dollar from 1,528.20 in the previous session on foreign return to the KOSPI.
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