South Korea’s Kospi index closed down more than 5 per cent on Monday, giving back much of a record rally three sessions earlier, as shares in Samsung Electronics and SK Hynix each fell close to 9 per cent.
Japan’s Nikkei 225 also fell, closing at 63,445.53, down 1.4 per cent, after coordinated yen buying by Japanese and US authorities pushed the currency sharply higher and undercut exporters.
How sharp was the reversal in Seoul?
The Kospi had risen 17.9 per cent on Friday, its largest single-day gain on record, after Samsung and SK Hynix both jumped more than 25 per cent. The Associated Press reported the index down 4.5 per cent at 6,298.75 in early Monday trading, with Samsung off 8 per cent and SK Hynix 7.8 per cent.
The index closed lower still, at 6,257.41. The Kosdaq triggered a sidecar mechanism during the session, a circuit-breaker applied when futures move beyond set thresholds.
| Index | Monday move | Close |
|---|---|---|
| Kospi (South Korea) | -5.13% | 6,257.41 |
| Nikkei 225 (Japan) | -1.4% | 63,445.53 |
| Hang Seng (Hong Kong) | +0.6% | 26,038.92 |
| Shanghai Composite | -0.5% | 3,812.97 |
| S&P/ASX 200 (Australia) | -0.2% | 8,961.30 |
Why did Asian stock markets fall on 3 August 2026?
Asian equity markets fell on Monday 3 August 2026, led by South Korea, where the Kospi index closed down 5.13 per cent at 6,257.41. Shares in Samsung Electronics and SK Hynix each fell close to 9 per cent, reversing gains of more than 25 per cent recorded on Friday when the Kospi rose 17.9 per cent in its largest single-day gain on record. Japan’s Nikkei 225 closed down 1.4 per cent at 63,445.53 after coordinated yen-buying intervention by Japanese and US authorities strengthened the currency and weighed on exporters. Hong Kong’s Hang Seng rose 0.6 per cent, while the Shanghai Composite fell 0.5 per cent and Australia’s S&P/ASX 200 slipped 0.2 per cent. The declines were driven by renewed selling in semiconductor and artificial intelligence shares rather than by developments in the Middle East.
What is driving the volatility?
The swings reflect an unsettled market in semiconductor and artificial intelligence shares. South Korean equities recorded a correction of 22.2 per cent during July before Friday’s rebound, and the Kospi is dominated by Samsung and SK Hynix, which amplifies moves in the chip sector.
Morgan Stanley upgraded South Korean equities to overweight, citing the entry point created after leveraged positions were liquidated, and set a long-term Kospi target of 9,000 points, favouring industrials, defence and financial stocks.
South Korean regulators are proposing measures to contain volatility, including emergency powers to cut leveraged exchange-traded fund ratios from twice to one and a half or one times exposure. Stricter margin requirements and investment caps are also under consideration.
What happened to the yen?
The dollar traded near 156.70 yen during the European session, having fallen as far as 155.20 earlier. The pair had approached 164 last week, close to a four-decade high, before retreating over four consecutive sessions as Japan and the United States bought the currency. The Bank of Japan has held its policy rate at around 1 per cent, its highest level since 1995, and has signalled that inflation risks remain tilted to the upside.
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Sources for this report
The Redline News Desk
The Redline News desk files and edits world reporting. Every story carries the sources it was built from, and corrections are published on the story itself.
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