KOSPI Faces 'Black Monday' as High Interest Rate Fears Weigh on Markets

Pushed Down to 7,400... 8% Plunge Triggers Circuit Breaker
Market Heavyweights Like Samsung Electronics and SK hynix Plummet
Jensen Huang: "You Should Be Happy to Buy at a Discounted Price Now"

The KOSPI index plunged more than 8% immediately after the market opened on the 8th, falling to the 7400 level. The exchange rate, KOSPI, and KOSDAQ indices are displayed on the status board in the dealing room of Hana Bank's headquarters in Jung-gu, Seoul. 2026.06.08 Photo by Dongju Yoon

As concerns over high interest rates continue to grow, the KOSPI has plunged to the 7,400 level. Analysts attribute the increased decline to a combination of the short-term surge in semiconductor stocks and supply-demand pressures arising from the upcoming SpaceX listing. However, experts point out that the outlook for Korean corporate earnings remains strong, and if the correction deepens, it could present a buying opportunity for undervalued stocks.

Fear of Interest Rate Hikes Pushes KOSPI Down to 7,400 Level

On June 8, the KOSPI opened at 8,048.09, down 1.38% from the previous trading day, and then plunged further to trade at 7,663.84 as of 10:03 a.m., a 6.09% drop. At one point early in the session, it plummeted by 8.80% to 7,442.73. With the index crashing more than 8%, a "circuit breaker" was triggered at around 9:03 a.m. The circuit breaker is a system that temporarily halts trading to calm the market when stock prices fall sharply. After being triggered, all stock trading is suspended for 20 minutes. This is the first time in three months that the circuit breaker has been activated on the KOSPI since the outbreak of war between the United States and Iran in March.

The KOSDAQ also opened at 959.61, down 4.27% from the previous session, and extended its decline to 943.09 as of 10:04 a.m., a drop of 5.92%. As the index fell below 1,000 points, the KOSDAQ has returned to the 930 level, which is near its level at the beginning of the year.

Analysts say that fears of a U.S. benchmark interest rate hike, a correction in technology stocks, and supply-demand pressures from the upcoming SpaceX listing have all contributed to the sharp decline in the stock market. Last Friday, the New York stock markets all fell as interest rate hike concerns spread. The Dow Jones Industrial Average fell 1.35%, the S&P 500 dropped 2.65%, and the Nasdaq Composite plunged 4.18%. The U.S. Department of Labor announced that non-farm payrolls increased by 172,000 in May compared to the previous month, significantly exceeding the consensus estimate of 80,000. The improvement in employment data has heightened expectations that the Federal Reserve could raise its benchmark interest rate, causing U.S. Treasury yields to spike.

Amid interest rate hike worries, major technology stocks such as Nvidia (-6.20%), Micron Technology (-13.25%), and ADM (-10.86%) all plunged, driving the Philadelphia Semiconductor Index down 10.26%. Semiconductor stocks experienced a sell-off not only due to interest rate concerns but also because some are warning that they have reached their peak. In a recent report, the global investment bank BNP Paribas projected, "After hitting a peak in the middle of this year, memory semiconductor selling prices will start to decline from early next year." With the SpaceX listing imminent and talk of a semiconductor peak spreading, aggressive selling has been concentrated in technology stocks.

KOSPI stocks that have led the market, such as Samsung Electronics and SK hynix, are also experiencing steep declines. As of 10:08 a.m., Samsung Electronics is trading at 302,500 won, down 8.05% from the previous session. SK hynix is trading at 1,988,000 won, down 3.96%. Even though Jensen Huang, CEO of Nvidia, and Chey Tae-won, Chairman of SK Group, announced plans this morning to jointly build a future artificial intelligence (AI) factory and strengthen semiconductor cooperation, share prices continued to fall. At a press conference held at the SK Seorin Building in Jongno-gu, Seoul, CEO Huang commented on the stock price plunge, saying, "Whatever happens in the stock market, you should be very happy because you can buy at a discounted price now." Nevertheless, this was not enough to stem the decline.

Other semiconductor-related stocks such as SK Square (-8.82%) and Samsung Electro-Mechanics (-4.15%) also trended downward, while most large-cap stocks, including Hyundai Motor (-9.14%), LG Energy Solution (-6.02%), Samsung Life Insurance (-9.45%), HD Hyundai Heavy Industries (-4.67%), and Hyundai Mobis (-11.54%), are plunging as well.

Foreign investors are leading the index's decline by net selling shares worth 600 billion won. Institutions are recording a net purchase of 7.8 billion won, while individuals have net purchased 550 billion won.

Securities Industry: "Possible Rebound After Short-term Correction" vs. "Need to Wait and See"

In the securities industry, some believe that since the outlook for Korean corporate earnings remains positive, this correction will be short-lived. Others warn that the correction could last longer than expected due to ongoing concerns about interest rates.

LS Securities pointed out in a report today that investors should be mindful of the possibility that the KOSPI could plunge more than 20% from its previous high. Daun Jeong, a researcher at LS Securities, said, "During past rate hike cycles, the KOSPI's maximum drawdown (MDD) from its previous peak reached -26.5% in August 2019 and -34.8% in September 2022," analyzing that the current correction could also be greater than expected. Jeong added, "Even considering volatility in the Korean market, there are still no clear signals of a bottom," and explained, "The upcoming SpaceX listing this week and the U.S. Federal Open Market Committee (FOMC) meeting next week could increase volatility."

On the other hand, Hana Securities advised investors to view this correction as a buying opportunity. Dooun Kim, a researcher at Hana Securities, said, "This correction is not due to an economic recession, but rather a compressed correction caused by the simultaneous occurrence of currency instability, interest rate repricing, and semiconductor profit-taking." He stressed, "The plunge in U.S. semiconductor stocks is a burden for the Korean market, but the direction of memory earnings has not yet changed." Kim added, "Instead of giving in to fear, investors should monitor exchange rate stability and look for opportunities to buy leading stocks again."

Kyungmin Lee, a researcher at Daishin Securities, also stated, "In the 7,000 to 7,500 zone, the KOSPI's valuation attractiveness will stand out," adding, "A strong upward trend is expected to re-emerge as the second-quarter earnings season unfolds in mid-June."

There are also expectations that the U.S. Consumer Price Index (CPI) for May, which will be released on the night of June 10 (Korean time), will be a turning point. Sangyoung Suh, a researcher at Mirae Asset Securities, predicted, "If the CPI exceeds expectations, U.S. Treasury yields could rise, which is likely to put pressure on AI and semiconductor stocks that have recently become more expensive in terms of valuation." On the other hand, Suh added, "If inflation is reported to be more stable than expected, the recent correction in semiconductor stocks may be seen as a phase of short-term profit-taking, leading to attempts at a rebound centered on growth stocks."

This content was produced with the assistance of AI translation services.