13.07.2026 - Circuit Breaker deserves Attention
This week start turned into a roller coaster for the South Korean stock market. South Korea’s benchmark KOSPI triggered a market-wide circuit breaker on Monday after plunging more than 8%, as a renewed selloff in heavyweight semiconductor stocks deepened concerns over artificial intelligence valuations and the outlook for memory-chip earnings.
The curcuit breaker gets triggered when the index falls by >8%. The trading halts for 20 minutes.
The sell-off accelerated after the geopolitical situation in the Middle East deteriorated further. Following their trading debut last Friday in New York, SK Hynix plunged nearly 13%, while Samsung Electronics slumped almost 9% after the United States launched another wave of attacks on Iran, Iran retaliated, and Tehran announced the closure of the Strait of Hormuz.
Remarkably, the KOSPI has triggered more circuit breakers over the past seven months than during the previous 28 years combined since the system was introduced in 1998.
A circuit breaker is a temporary trading halt designed to prevent panic-driven buying or selling during periods of extreme market volatility. By pausing trading, regulators aim to give investors time to assess new information, reduce emotional decision-making, and maintain orderly financial markets.
Markets:
Equities: Global equities remain under pressure, although European markets continue to show relative resilience
Bonds: Government bond yields moved higher; US 10y yield around 4.59%, Japan 10y yield at 2.79%
Commodities: Oil prices continued to rise, with WTI above USD 74/barrel and Brent towards USD 79/barrel
Precious metals: Gold eased to USD 4’060/oz and silver trading at USD 58/oz
Currencies: USD trading sideways
Cryptos: weak - Bitcoin falling towards USD 62k
Volatility: VIX climbing towards 17
My View: The events in South Korea may offer a preview of what could eventually unfold across global technology markets if the AI bubble begins to unwind.
The AI rally has become increasingly concentrated, heavily leveraged, and driven by exceptionally optimistic expectations. When sentiment changes, liquidity can disappear surprisingly quickly, forcing indiscriminate selling and triggering sharp declines.
The recent circuit breaker in South Korea is therefore more than just a local market event, it serves as a reminder that even the strongest bull markets can reverse rapidly once confidence starts to crack.
Markets often appear calm until they suddenly aren't.
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