Asian equity markets plunged in unison on July 28, battered by semiconductor headwinds originating from China and the ripple effects of a sharp sell-off in U.S. technology stocks. Japan’s Nikkei 225 Stock Average (Nikkei index) briefly tumbled more than 2,600 yen (approximately $15.88) intraday, breaking below the 63,000-yen threshold, while South Korea’s Kospi index crashed over 8%, triggering its eighth circuit breaker so far this year.
On the Tokyo Stock Exchange, the Nikkei opened approximately 400 yen (approximately $2.44) lower than the previous session’s close before rapidly accelerating its losses. The intraday decline surpassed 2,300 yen (approximately $14.05) during the morning session, and according to the Sankei Shimbun, the index at one point plunged more than 2,600 yen (approximately $15.88), dipping below 63,000 yen. This represents a staggering drop of over 10,000 yen (approximately $61.07) from the all-time intraday high of 72,831 yen recorded on June 22.
The sell-off directly mirrored the previous day’s U.S. market action, where major AI and semiconductor names faced heavy selling pressure. On July 27 (local time), Nvidia tumbled nearly 5% in New York trading, surrendering its top market capitalization ranking to Apple, while shares of major memory chip companies also fell sharply. Market participants pointed to concerns over future capital raising and intensifying competition from Chinese companies entering the market as key drivers behind the AI and semiconductor sector’s decline.
In Tokyo, high-valuation semiconductor-related stocks, led by chipmaking equipment giant Tokyo Electron, bore the brunt of the selling. As of 9:15 a.m., the Nikkei stood at 62,939.31, down 1,991.88 yen (approximately $12.16) or 3.07% from the previous close, while the Tokyo Stock Price Index (TOPIX) shed 77.13 points, or 1.90%, to 3,988.94.
The shock was even more severe in South Korea’s equity market. The Kospi index opened sharply lower at 6,400 points, down 5.26%, and by around 10:13 a.m. had tumbled to 6,213.51, an 8.02% decline from the previous session. The Korea Exchange triggered a Level 1 circuit breaker after the Kospi remained more than 8% lower for one minute, halting all trading on the main KOSPI market for 20 minutes. This marked the eighth circuit breaker activation this year.
Before the circuit breaker was triggered, a sell-side sidecar was activated at 9:06 a.m., suspending program sell orders for five minutes. At that time, the Kospi 200 futures index had plunged 68.80 points, or 6.42%, to 1,001.54, meeting the threshold for the mechanism. The Kosdaq index also fell more than 3%, sliding toward the 740-point level.
The immediate catalyst for the global semiconductor stock rout is widely attributed to the rise of China’s CXMT (ChangXin Memory Technologies). Concerns that CXMT’s growth signals the imminent realization of China’s semiconductor and AI technology catch-up spread rapidly through markets. This also weighed heavily on South Korea’s flagship chipmakers Samsung Electronics and SK Hynix, with the so-called “Sam-nix” duo tumbling even before the regular trading session began.
Anxiety was also palpable in currency markets. The won-dollar exchange rate traded around 1,469 won (approximately $0.9998), up 0.26% from the previous session, heightening concerns about foreign investor selling in South Korea’s equity market. Added caution ahead of the U.S. Federal Reserve’s benchmark interest rate decision further amplified market volatility.
Meanwhile, the Nikkei reported that as AI-related stocks have increasingly driven Japan’s market, “wild price swings” with daily index fluctuations exceeding 2% have become routine. The Nikkei had already delivered a roller-coaster session the previous day, swinging from a 600-yen (approximately $3.66) gain to a 400-yen (approximately $2.44) loss, suggesting that challenging investment conditions amid global uncertainty are likely to persist for the foreseeable future.