Industry data unveiled on Thursday indicated that earlier in the week, the South Korean stock market took a significant nosedive, largely driven by concerns regarding the valuations of AI-related stocks. This downturn was accompanied by a notable surge in short-selling activities, which escalated to levels unseen in over two years. On Wednesday, the Korea Composite Stock Price Index (KOSPI) experienced a brief but sharp decline, plummeting more than 6% during trading hours before closing down over 2%. This steep drop triggered a five-minute 'seller's circuit breaker' at the Korea Exchange, a mechanism designed to temporarily halt trading and stabilize the market in the face of extreme volatility.

Data sourced from the Korea Exchange revealed that the value of stocks subjected to short selling on that particular day soared to an impressive 1.97 trillion won (equivalent to approximately $1.4 billion). This figure marked the highest level of short-selling activity since the battery stock sell-off that rocked the KOSDAQ market on July 26 of the previous year. During that episode, short-selling transactions reached a staggering 2.4 trillion won, underscoring the severity of market sentiment at the time.