The South Korean Kospi index fell 18.8% in the third quarter, making it the worst-performing major global stock index. The decline began in early July, primarily due to concentrated selling in core AI memory stocks such as Samsung Electronics and SK Hynix, as well as the unwinding of leveraged positions by hedge fund Situational Awareness and deleveraging of leveraged ETFs by South Korean retail investors. Samsung Electronics and SK Hynix together account for half of the total market capitalization of the South Korean stock market, and their forward P/E ratios have fallen to 4 to 5 times. Rising global bond yields and a tight domestic interest rate environment in South Korea also exerted pressure. Despite the sharp drop in the third quarter, the Kospi index is still up approximately 60% year-to-date. Analysts believe that the valuation re-rating has been completed, but cyclical supply risks in the chip industry and a high interest rate environment may still limit future performance.