The Kospi fell sharply as large-cap semiconductor shares dropped in tandem. As levels seen intraday as support broke one after another, retail stop-loss selling poured out, and talk of 'panic-selling' spread inside and outside the market.

Memory-chip-related shares fell hardest. Market sentiment that had dreamed of a Kospi at 10,000, buoyed by AI demand, froze abruptly, giving back much of its recent gains.

To counter excessive volatility, the government proposed setting per-investor leverage limits on single stocks. The move reflects a judgment that borrowing to concentrate bets on a single name magnifies losses in a sell-off.

Financial authorities said the measure aims to temper speculative crowding and protect retail investors. Some, however, countered that it could dampen market autonomy.

Brokerages argued the correction owes more to stretched valuations and external uncertainty than to deteriorating corporate earnings — meaning a rebound is possible if sentiment stabilizes.

With interest in the domestic market rising among Sinophone investors in Korea, the volatility is encouraging a wait-and-see stance. Experts advise diversification and a long-term view over leveraged short-term trading.

The government and the Bank of Korea said they would watch conditions closely and weigh further stabilizing steps if needed.