South Korea's KOSPI index opened sharply higher on Wednesday, June 24, following Tuesday's devastating 10% crash, but the recovery quickly lost momentum. The index opened at 8,356.79, up 1.86% from Tuesday's close of 8,203.84, and briefly extended as high as 8,543.68, a gain of over 4%. However, the recovery faded quickly, with the index pulling back to 8,297, trimming the day's gain to around 1%. The divergence between South Korea's two biggest chipmakers tells a clearer story, with Samsung Electronics holding relatively firm, trading around 322,500 won, still up on the day, but well off the early 7% surge. SK Hynix reversed course more sharply, falling to 2,467,000 won after earlier trading near 2,653,000 won, putting SK Hynix back in the red for the session. The KOSDAQ also opened higher but has given back much of its early advance, as reported by The Times of India.
The market crash was triggered by South Korea's proposal to tax unrealized gains on stocks and real estate at a National Assembly forum on Tuesday, marking what local traders are already calling Black Tuesday across the entire Korean stock market. The proposal would tax investors on paper profits they have never realized by selling, redefining how wealth is treated in Asia's fourth-largest economy. Lawmakers from the Democratic Party, the Progressive Party, the Rebuilding Korea Party, and the Social Democratic Party signed on to the forum, along with civic groups including the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions. The forum was framed as "Exploring the Tax Gap on Asset Income and a Transition to Comprehensive Income Taxation," with organizers arguing that rising wealth signals rising capacity to pay regardless of whether assets are sold. This represents the first time the campaign has explicitly reached unrealized stock gains, as under current law investors owe tax only when they sell shares and lock in a profit.
Major chipmakers experienced significant losses, with SK Hynix trading at 2.467 million won, down from earlier levels near 2.653 million won, and Samsung Electronics falling to 322,500 won, still up on the day but well off the early 7% surge. SK Hynix's reversal reflects the stock's specific vulnerability, as the chip stock had overtaken Samsung as South Korea's most valuable listed company earlier this month, powered by its dominance in High Bandwidth Memory. That premium makes it more exposed when AI chip sentiment turns. Among other index heavyweights, LG Energy Solution slid 2.98%, while Hyundai Motor and sister automaker Kia Corp were down 8.78% and 6.47% respectively. Of the total 918 traded issues, 131 shares advanced while 771 declined. The drop extended a historic session from the prior day, when Samsung lost the top KOSPI market-cap position to SK Hynix for the first time in 26 years, as noted by Bloomberg. Samsung Electronics and SK Hynix together contributed over 52% of the weightage to the KOSPI index, making their 10% decline a critical factor in the index's sharp plunge.
The market crash underscores the growing volatility of what has been the world's best-performing major equity gauge this year, with margin debt rising to a record 38.5 trillion won ($25 billion) this month, according to Korea Financial Investment Association data. Foreign investors sold nearly 5 trillion won of Kospi shares on Tuesday, while retail traders added a record 7.9 trillion won of positions, as reported by Business Standard. According to The Times of India, overseas investors offloaded more than 4 trillion won ($2.6 billion) worth of Kospi shares by midday, while retail investors moved in the opposite direction, purchasing stocks as prices fell. VK Vijayakumar, chief investment strategist at Geojit Financial Services, attributed the fall to a combination of factors, including sharp profit-taking after a record rally that had taken the KOSPI to record highs, stretched valuations in AI- and semiconductor-linked stocks, and elevated leverage in the system. The stock market has shown several signs of being overheated in recent days, with SK Hynix shares having gained more than 2% for eight straight days, extending its rally for the year to nearly 350% earlier this week.
Wednesday's early jump looked like classic post-crash position covering, with retail investors and institutions buying the dip while foreign investors stayed net sellers. Kiwoom Securities researcher Han Ji-young had said the market would open higher on technical buying once investors priced in the US semiconductor selloff — and it did. However, holding those gains is proving harder as sellers returned fast. With Micron Technology's earnings due after the US close on June 24, traders appear unwilling to hold positions. The result and its guidance on memory chip demand will set the tone for Samsung, SK Hynix, and Kioxia heading into the rest of the week. A strong Micron print could stabilise sentiment, while a miss risks extending Tuesday's selloff into a second wave. The Korea Exchange activated a circuit breaker at around 2:33 p.m., halting trading for 20 minutes during Tuesday's crash, as reported by The Times of India.
