Asian Markets Crash: South Korea’s KOSPI Falls 7.57%, Taiwan Sees Record Foreign Outflows

16 Oct 2026 , 01:05 PM

Asian stock markets sold off on Thursday, following strong US inflation data which raised concerns that the Federal Reserve would keep interest rates higher for longer. South Korea’s KOSPI fell 7.57% on Thursday, October 15, while Taiwan’s market saw a reported record single-day outflow of NT$302.5 billion, equivalent to approximately $9.3 billion.

Technology and semiconductor shares led the fall which temporarily paused a major market in South Korea as losses accumulated during the session.

South Korea Stock Market: KOSPI Falls 7.57%

South Korea’s benchmark KOSPI index dropped 454.59 points to close at 5,554.22. The index had fallen up to 9.29% intraday which led to a 20 minute pause in trading.

The index hit a new losing streak of seven consecutive sessions as it reached a six month low. The pause in South Korea’s markets was reportedly the 10th for the index this year.

South Korea Market Snapshot

Indicator	Details
KOSPI closing level	5,554.22
Point decline	454.59
Closing decline	7.57%
Maximum intraday decline	9.29%
Trading halt	20 minutes
Foreign investor net selling	3.6 trillion won
Korean won exchange rate	1,344.6 per US dollar

South Korea-based foreign investors sold shares valued at 3.6 trillion won or around $2.68 billion.

Samsung Electronics, SK Hynix Lead Semiconductor Sell-Off

Semiconductor shares saw some of the biggest losses as concerns about US interests rates and spending on artificial intelligence (AI) took the technology stocks down.

Stock or indicator	Decline
Samsung Electronics	9.5%
SK Hynix	11.1%
LG Energy Solution	4.6%
Hyundai Motor	5.7%
Philadelphia Semiconductor Index	4.3% overnight

Samsung Electronics and SK Hynix shares were big contributors on South Korea’s markets after the Philadelphia Semiconductor Index saw a 4.3% overnight fall. The fall in technology shares reflects concerns that the large sums going into AI infrastructure will lead to earnings growth at a pace that supports valuations. Increasing interest rates can decrease the present value investors apply to earnings, especially with technology stocks. Of the 917 South Korean stocks traded during the session, 789 were down and 113 up indicating that a decline was not limited to some big technology stocks.

Taiwan Stock Market Sees Record Foreign Outflows

Taiwan’s stock market also experienced a sell-off as it fell more than 1,600 points as a result of foreign investors reportedly seeing a net sale of NT$302.5 billion, or approximately $9.3 billion in a single day. The outflow placed further pressure on a market that is well exposed to the semiconductor manufacturing and global technology sector. Domestic investors, however, took the opposite approach and grew their exposure to exchange-traded funds (ETFs).

Taiwanese ETFs Attract Domestic Buying

Yuantai Taiwan 50 ETF (0050) recorded a reported record NT$37.8 billion in net subscriptions. The Yuanta Taiwan 50 Daily Leveraged 2X ETF (00631L) attracted NT$11.9 billion in inflows to reach its largest daily inflow in six months. The move suggests that some domestic investors believed the steep drop could be an opportunity to add exposure to the market. However, inflows to ETFs do not mean that the market is close to a bottom.Leveraged ETFs also have more risk as they look to enhance daily index moves but can see large losses when the market falls day after day and fail to capture twice the rise of a given index when it moves upward.

Why are Asian Stock Markets Falling?

The selling reflects concerns about US inflation, interest rates and technology sector valuations.

1. Higher US inflation raises rate concerns
Stronger than expected US Consumer Price Index led to concerns that inflation could remain persistent and that inflation could keep the Federal Reserve from loosening its interest rate policy for a longer period of time. Higher rates can increase financing costs to businesses and can make equities less attractive compared to interest instruments.

2. Semiconductor stocks face valuation pressure
South Korea and Taiwan have a big exposure to the global semiconductor industry. Semiconductor stocks can see large share-price moves when investors start to reconsider the outlook for spending on technology. Concerns over the sustainability of AI spending have added to the uncertainty, particularly with those companies with valuations that appear to be built on continued increases in data centres, advanced chips and related infrastructure.

3. Foreign investor selling intensifies declines
The reported outflows from South Korea and Taiwan from foreign investors added further pressure to already struggling markets. Large selling activity can add to declines in markets, particularly when focused on major constituents. However, the direction of the market is not just driven by foreign fund flows. There are several other factors that affect performance, including domestic demand, company earnings, movement in currency and economic conditions.

Can Asian Markets Recover from the Sell-Off?

Some analysts have pointed to long term growth prospects and a potential rebound after a strong decline. Historical prices cited in the supplied report show that the Taiwan 50 Index rose between 24.3% and 147.3% in the six months after each of four previous significant sell-offs. Those examples are not a guarantee that the same will happen now and the size and length of a rebound will vary depending on the circumstances surrounding the sell-off. In South Korea, financial authorities reportedly held an emergency meeting and pledged to respond in a proactive manner to support the market and protect investors. However, the effectiveness of any measures will be tested against the conditions surrounding the situation.

What Should Investors Watch Next?

The next directions in Asian markets will be partly driven by whether US inflation and interest rate expectations stabilize. Investors will also turn to the semiconductor earnings, updated spending on AI and movement in funds as well as foreign fund flows. For South Korea and Taiwan, the big concentration on their stock markets on technology and semiconductor companies makes the outlook on global chip demand all the more important. The big fall in South Korea’s stock market and Taiwan’s domestic ETF inflows show two different approaches by investors in response to a common set of market developments. Neither is a sure indicator of what will happen in the future.

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