KOSPI Falls Over 4% as Trading Resumes After Holiday, Deepening Bear Market

South Koreas KOSPI index reopened lower on July 20, its first session since Fridays Constitution Day holiday. The index slid as low as 6,498 points before paring some losses. The drop pushed the index more than 25% below its June peak, meeting the threshold for a technical bear market. Chip-sector jitters compounded with an escalating US-Iran conflict to drive the slide. Chip Stocks Swing Hard on Reopening Samsung Electronics and SK Hynix stock both opened down more than 5% before foreign investors moved in. The Philadelphia Semiconductor Index shed 4.3% while Korean markets stayed shut for the holiday last Friday. Rising competition from Chinese AI models added further pressure on the memory chip trade. After not trading last Friday, the Kospi returned today, dropping sharply from its last close. Image Source: Trading View Foreign investors net bought 278.4 billion won ($187.1 million) in early trading, concentrated in electronics stocks. Retail investors net sold 300.8 billion won over the same window. Han Ji-young, a researcher at Kiwoom Securities, said the decline reflects how far leading stocks have fallen. Since July, the KOSPI has dropped by about 25% from its peak, entering a technical bear market. A sharp decline of 3040% in leading stocks such as Samsung Electronics, SK Hynix, and Samsung Electro-Mechanics is amplifying the sense of decline. Won Slides as Middle East Risk Builds The won-dollar rate opened at 1,488.3, extending its slide while oil prices climbed on fears that the conflict could disrupt the Strait of Hormuz. The stronger dollar added to import-price pressure already building after the Bank of Koreas first rate hike since 2023. Analysts see this weeks US hyperscaler earnings as the next catalyst. Alphabet reports July 22, with Microsoft, Meta, and Amazon following before months end. Their capital spending outlooks could determine whether chip stocks find a floor or extend the slide.