KOSPI Expected to Rebound on Wednesday After Steep Sell-Off

South Korea's benchmark KOSPI index experienced a sharp decline on Tuesday, July 28, 2026, despite its recent robust performance. The index, after ending a three-day winning streak, fell in two of the last three trading days, closing down 10.84%, or 732.09 points, at 6,023.66. This significant drop was driven by broad-based selling pressure, particularly in technology stocks. However, with the index holding just above the 6,020-point level, there is an expectation for a rebound on Wednesday.

The steep fall in the KOSPI was primarily attributed to an intense global sell-off in the semiconductor sector. Growing concerns over artificial intelligence (AI) spending and reports regarding China's advancements in domestic chip-making tools fueled investor risk aversion. Leading South Korean semiconductor manufacturers, Samsung Electronics and SK Hynix, both saw their shares tumble by over 10% on Tuesday, significantly contributing to the index's overall decline. Despite a 28.24% decline over the past month, the index remains 86.46% higher than a year ago.

This latest pullback has pushed the KOSPI to a three-month low. The technology sector, especially semiconductor and computer hardware stocks, bore the brunt of the losses. Furthermore, declining crude oil prices, amidst optimism for a resolution to the U.S.-Iran conflict, also led to weakness in oil service stocks.

The year 2026 has been exceptional for the KOSPI, largely driven by the AI and semiconductor sectors. The index first surpassed the 6,000-point mark in February 2026, marking a historic milestone, and reached an all-time high of 9,385.59 points in June 2026. This rally was fueled by strong expectations surrounding the AI supercycle, primarily led by companies like Samsung Electronics and SK Hynix.

Nevertheless, concerns about overvaluation in AI-focused stocks and the concentration of gains in a few major companies had been noted in the market. Goldman Sachs Research, in May 2026, had raised its 12-month KOSPI target to 9,000 points, citing a semiconductor memory supercycle and a projected 300% earnings growth for 2026. Analysts at Trading Economics anticipate the KOSPI to trade at 6,300.13 points by the end of this quarter, but project a potential retreat to 4,826.61 points within 12 months, indicating expected volatility and a potential correction from its peaks. While global markets show cautious optimism amid hopes for an end to Middle East hostilities, the KOSPI is broadly expected to stage a recovery on Wednesday.