South Korea's stock market crashed as China's DUV breakthrough spooked investors

South Korea's average household mortgage lending rates reached their highest level in over two years during June, as the Bank of Korea's recent rate hikes ripple through the banking system. The average interest rate on new bank loans climbed to 4.31 percent in June, marking the second consecutive monthly increase and reflecting rising borrowing costs across the economy (via Korea Joong Ang Daily).

Fixed rates breach 7% at top banks. Five-year fixed-rate mortgage offerings at South Korea's five largest commercial banks now range from 4.79 percent to 7.52 percent per annum, with the highest rates in the mid-to-high 7 percent range. The climb reflects the benchmark rate increase to 2.75 percent on July 16—the first hike in three and a half years—and a broader shift in monetary policy away from stimulus toward inflation control.

South Korea's benchmark KOSPI index crashed 10.8% to close at 6,023.66 on July 28, marking its weakest close since April and among the sharpest single-day collapses of the year. The rout was triggered by a report from The Information that China has begun mass production of homegrown deep ultraviolet chipmaking tools, raising fears of accelerated Chinese competition in an industry where South Korea holds sizable market share (via Korea Joong Ang Daily).

Samsung and SK Hynix lead the selloff. Samsung Electronics shed 13.4% while SK Hynix dropped 14.7%, wiping enormous value off the nation's two largest chipmakers and dragging down the broader index. LG Innotek fell 16.3%, Seoul Semiconductor lost 8.8%, and other tech-dependent stocks followed, as foreign institutional investors offloaded shares amid broader anxiety about whether the current AI boom can sustain semiconductor valuations. The exchange triggered trading sidecars multiple times during the session to manage the velocity of the decline.

The Financial Services Commission announced plans to distribute single-stock leveraged exchange-traded fund rebalancing orders throughout the trading day rather than concentrating them at market close, seeking to reduce the sharp price swings that have plagued Korea's stock market in recent months (via The Korea Herald). FSC Chairman Lee Eog-weon urged asset managers to adopt the policy voluntarily, warning that the regulator is evaluating additional measures including minimum cash deposit requirements if the industry does not comply.

Volatility has become a chronic problem. The leveraged ETF sector has grown substantially in South Korea and has been blamed for amplifying market swings on days when large orders hit near the close. The regulator's move reflects a broader push to reduce mechanical selling pressure that feeds on itself as automated rebalancing orders hit in concentrated waves.

Kim Jiwoong, a member of the nine-member boy group ZEROBASEONE (ZB1), announced on July 28 that he will pause some of his participation in group activities to focus on an upcoming drama project (via Pannchoa). His management, Nest Management, said the conflict emerged as the label worked to coordinate his acting commitments with his ZB1 schedule. Jiwoong will be absent from scheduled group performances including the August 9 SBS Gayo Daejeon Summer festival.