South Korea’s stock market experienced unprecedented instability in 2026: the volatility of the Kospi index exceeded that of Bitcoin by more than 60%. Bloomberg reports that sharp price swings forced the Korean exchange to trigger automatic trading halts seven times since the start of the year to prevent investor panic. By comparison, trading was halted only once in 2024 and not at all in 2025.
The main driver of the abnormal turbulence in one of the world’s highest‑return markets was the surge and subsequent collapse of shares in Samsung and SK Hynix, key memory suppliers to the artificial intelligence industry. After sparking massive investor excitement and surging in June, their stocks plunged in July. Against this backdrop, investments in the Kospi have effectively turned into high‑stakes bets on AI development, heavily reliant on leverage and financial derivatives. The market’s deep imbalance is illustrated by the fact that on the day Kospi closed at a historic high at the end of June, shares of 650 out of the 831 companies in the index actually fell in value.
Experts emphasize that real returns from end‑use AI technologies are not yet sufficient to justify the enormous costs of building the necessary infrastructure. Investors’ concerns about sector overheating are intensified by heightened market sensitivity to any competitor successes. In particular, the launch of a new Chinese neural network, Moonshot Kimi K3, capable of directly competing with flagship US offerings from OpenAI and Anthropic, became a significant irritant for the market.