The sell-off in South Korean stocks deepened, with chipmakers continuing to suffer losses after disappointing earnings from SK Hynix Inc. and retail investors reducing their holdings.
The benchmark Kospi index fell by as much as 6.5%, bringing its two-day loss to more than 16%.
The index is on track for a record monthly loss, having fallen more than 30% in July, following a rally that outperformed global markets earlier this year and relied almost entirely on shares of chipmakers Samsung Electronics Co. and SK Hynix.
SK Hynix shares fell more than 10% on Wednesday, after an earnings call with analysts ended with few details on shareholder returns and its long-term contracts with customers.
The chipmaker's stock fell by about a fifth of its value in two days. The company also said it would increase its capital spending to at least $31 billion, after announcing a nearly sixfold increase in its quarterly profits.
No place to hide
Josh Gilbert, senior Asia Pacific and Middle East analyst at Etoro Ltd, said: SK Hynix is raising its capital expenditure to around 40 trillion won, while remaining silent on shareholder returns and prices included in its long-term contracts, leaving investors on edge.
He added: Given the weight that SK Hynix and Samsung have in the KOSPI index, there is nowhere to hide when they both decline.
Individual investors, who have helped fuel the rise of Korean stocks this year through margin loans and debt-funded exchange-traded funds, were net sellers on Wednesday. They reduced their holdings by about 1.47 trillion won ($1 billion) in morning trading.
The Kospi index fell below 6,000 points to its lowest level since early April. Investors are now awaiting Samsung Electronics' earnings results on Thursday, and results from other major US technology companies this week.
