Circuit Breakers Triggered as KOSPI and KOSDAQ Plummet 7%

The domestic market activated its circuit breaker safety mechanism on Tuesday, which briefly halts stock trading, as the KOSPI and KOSDAQ both plunged more than 7% in a single day. The combined market capitalization of domestic listed companies shrank by more than 400 trillion won overnight.

The KOSPI opened on the 14th down more than 6% and kept sliding, eventually breaching the 7% mark. Trading was halted for 20 minutes on the KOSDAQ at 12:23 p.m., followed by the KOSPI 15 minutes later. The plunge continued even after a sell-side sidecar—a measure that temporarily permits only buy orders during steep declines—was triggered shortly after the open. It was the first time since July 29 that circuit breakers were triggered in both markets on the same day.

A circuit breaker suspends trading across the entire market when stock prices fall sharply, in order to prevent investor panic and further losses. The simultaneous triggering in both markets is a rare occurrence, drawing attention to the cause of the crash and whether the market will stabilize.

Even after trading resumed, the KOSPI failed to rebound, closing at 5,554, down 7.57% from the previous session. The KOSDAQ also ended the day at 760, down 7.65%. Samsung Electronics tumbled 9% and SK hynix 11%, with both stocks posting their steepest declines since late July.

Behind the rout are concerns about profitability in the AI industry. On the day of the crash, U.S. consumer inflation came in above expectations, reducing the likelihood of further rate cuts and raising speculation that AI companies building data centers with massive borrowed funds will face heavier financing costs. Kim Seok-hwan, a researcher at Mirae Asset Digital Research, said, "Neocloud companies have credit ratings considerably weaker than those of big tech firms," adding, "The key question is whether they can remain profitable amid high interest rates and capital-raising costs."