The South Korean Kospi stock index showed a sharp decline of 16 percent on July 28 and 29, which led to a two-fold activation of the exchange's trading suspension mechanisms. The main catalyst for the sell-off was investors' growing doubts about the feasibility of large-scale investments in artificial intelligence infrastructure amid increasing global competition. Additional pressure was exerted by the successful initial public offering of the Chinese company CXMT in Shanghai, whose market capitalization exceeded 488 billion dollars. Against this background, shares of the South Korean industry leader, SK Hynix, fell by 15 percent after the publication of a report in which record operating profit growth fell short of analysts' consensus forecasts, and announced capital expenditures reached $ 31 billion.

The structural features of the market significantly aggravated the scale of the fall in quotations. SK Hynix and Samsung Electronics together account for about half of the total capitalization of the Kospi index, which creates a high concentration of systemic risks. The situation was further destabilized by the recent launch by regulators of sixteen internal leverage funds, whose assets quickly reached $50 billion. The mechanics of such tools involve the automatic sale of underlying assets while reducing their value, which generates a self-reinforcing downtrend effect. As a result, the Kospi volatility index is consistently maintained at extremely high levels, many times higher than historical averages.

The macroeconomic consequences of the crisis have affected the global debt market. The cost of five-year credit default swaps on a basket of the five largest American technology corporations generating demand for memory chips rose to a record 162 basis points, signaling an increase in perceived risks due to negative free cash flow. In response to the market shock, the South Korean government initiated emergency measures, including limiting the share of shoulder funds in the portfolios of private investors and raising the minimum entry threshold, and senior officials issued an official apology for the lack of elaboration of regulatory initiatives. At the same time, the cryptocurrency spot market has demonstrated high resilience, although derivatives for Korean stocks on decentralized platforms such as Hyperliquid have undergone large-scale forced closures of positions.