The index shed 669.01 points or 8.95 percent to close at 6,806.93.
The crash, which forced the Korea Exchange to halt trading for 20 minutes, was driven by the same two stocks that had fueled the rally in recent months. SK hynix plunged 15.4 percent to 1,845,000 won (US$1,228) as profit-taking accelerated after its American depositary receipt (ADR) listing last Friday and brokerages cut earnings forecasts, while Samsung Electronics fell 10.7 percent to 254,500 won ($169).
Foreign investors dumped another 1.7 trillion won worth of shares as the Bank of Korea was widely expected to raise rates later this week, sending the index below 7,000 points for the first time since early May.
A circuit breaker was triggered at 1:28 p.m., suspending all trading on the main board for 20 minutes, marking the seventh such halt this year. A sell-side sidecar had already halted program selling at 10:34 a.m., marking the 35th sidecar activation this year, surpassing the 26 recorded during the 2008 financial crisis.
Foreign investors sold a net 1.71 trillion won and institutions offloaded 2.20 trillion won. Individuals bought a net 3.88 trillion won, once again standing as the only buyers amid the market decline.
The selling was concentrated in semiconductor stocks. Traders viewed SK hynix's decline as a "sell-the-news" reversal following its record-setting Nasdaq debut, while lower earnings forecasts fueled concerns that the KOSPI’s semiconductor-driven rally had become overheated.
The damage spread through the SK and Samsung groups. SK square sank 17.6 percent to 1,161,000 won ($773) and Samsung Electro-Mechanics dropped 18.6 percent to 1,289,000 won ($858).
The junior KOSDAQ also fell, losing 38.07 points or 4.55 percent to close at 799.36, slipping below the 800 mark.
The rout spread across Asia. The Nikkei 225 in Tokyo fell 1.9 percent, with memory chipmaker Kioxia tumbling 12.9 percent, while Shanghai's composite index dropped about 2 percent.
The won weakened slightly against the dollar, trading at 1,502.60 won later in the day.
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