South Korea's KOSPI closes down 6% after a 12.6% intraday plunge as Seoul unveils market stabilisation curbs

South Korea's KOSPI index fell as much as 12.6% during trading on Wednesday 29 July 2026, then trimmed part of the loss to close down 6%, a second consecutive session of declines after Tuesday's near-11% rout. According to Reuters, the sell-off cut about $2.18 trillion from the value of the Seoul equity market, leaving it on course for its steepest monthly drop on record. The slide has erased almost 40% of the index's value from a peak reached little more than a month ago.

Waning investor appetite for chipmakers, which had previously benefited from the wave of AI investment, was cited as the main driver. Frank Benzimra of Societe Generale said what is falling in the market are the stocks carrying the most leverage. Jon Withaar of Pictet Asset Management pointed to signs of panic and forced unwinding across Asian technology.

After a late Wednesday meeting attended by the central bank governor and the heads of financial regulators, South Korea's finance ministry said it would immediately pursue further curbs on single-stock leveraged products, including individual investment limits, citing as an example a cap of up to 20% of an investor's total investment amount, higher trading costs to deter excessive activity, and simulated trading requirements. The ministry added that it would prepare a legal basis for emergency market-stabilisation steps. Despite the tumble, the KOSPI is up 41.5% in US dollar terms so far in 2026, the best performance among major world markets.