South Korea stock market experienced its sharpest decline this year on Monday, triggering an automatic trading halt as technology shares suffered widespread losses. The Kospi index fell 8.3 percent, with chipmakers Samsung and SK Hynix each declining approximately 10 percent.
The selloff forced a 20-minute suspension of trading, part of a circuit breaker mechanism designed to prevent panic trading. This was the third time the mechanism has been activated this year.
Markets across the Asia-Pacific region recorded losses. Japan Nikkei index dropped 3.9 percent, while India benchmark index fell nearly 1 percent. New Zealand NZX 50 declined 0.94 percent.
In contrast, US markets showed recovery following last week technology-led selloff. The Nasdaq Composite rose 0.86 percent, and the S&P 500 gained 0.30 percent. Semiconductor stocks led the rebound, with the Philadelphia Semiconductor Index climbing 5.6 percent.
Market analysts attributed the volatility to a combination of factors, including concerns about the valuation of artificial intelligence investments and expectations of higher interest rates in the United States. Last week stronger-than-expected US employment data reinforced expectations that the Federal Reserve might maintain its restrictive monetary policy.
South Korean President Lee Jae-myung expressed confidence that domestic shares remained slightly undervalued despite the market turbulence, according to remarks reported by local media.
The sharp decline in Asian markets came amid broader concerns about global economic conditions. Rising oil prices following the Israel-Iran exchange of fire added to investor concerns about persistent inflationary pressures.
The tech-heavy Kospi index had posted significant gains in preceding months, driven by substantial investment flows into the country semiconductor and technology companies. Analysts noted that markets with high concentrations in technology stocks tend to be particularly sensitive to shifts in investor sentiment.