--- title: "Seoul suspends its 140% margin rule for three months as SK hynix falls 11.7% despite a record quarter" description: "South Korea suspended the collateral rule that forces brokerages to liquidate margin accounts, announced the same morning the KOSPI broke 5,000 and tripped its 11th circuit breaker of the year. Seoul is spending three months of policy flexibility on the view that leverage, not AI demand, is doing the selling." publisher: "The Inference" section: "Chips" published: 2026-11-06T14:09:29.430Z modified: 2026-11-06T14:09:29.430Z canonical: https://theinference.org/article/seoul-suspends-its-140-margin-rule-for-three-months-as-sk-hynix-falls-11-7-despite-a-record-quarter language: en keywords: "SK hynix, Samsung, HBM, Memory, AI Selloff, South Korea" --- # Seoul suspends its 140% margin rule for three months as SK hynix falls 11.7% despite a record quarter > South Korea suspended the collateral rule that forces brokerages to liquidate margin accounts, announced the same morning the KOSPI broke 5,000 and tripped its 11th circuit breaker of the year. Seoul is spending three months of policy flexibility on the view that leverage, not AI demand, is doing the selling. ## A record quarter, then a 25% slide Minutes into Friday's session in Seoul, [SK hynix](https://theinference.org/markets/companies/sk-hynix), the high-bandwidth memory (HBM) supplier whose chips sit beside [Nvidia](https://theinference.org/markets/companies/nvidia)'s AI accelerators, fell 11.71% to 1,116,000 won [1][4]. [Samsung Electronics](https://theinference.org/markets/companies/samsung), its fellow memory maker, dropped 9.98% to 181,400 won [4]. Nine days earlier SK hynix had [reported record quarterly revenue of 104.62 trillion won, its first quarter above 100 trillion](https://theinference.org/article/sk-hynix-banks-its-first-100-trillion-won-quarter-at-an-80-margin-as-apple-cuts-iphone-orders), up 328% year on year at a 79.7% operating margin [7][8]. The stock has lost roughly a quarter of its value since the print. *Chart: **SK hynix has lost a quarter of its value since its record quarter** Column chart of SK hynix share price in won: 1,487,000 on October 28, 1,264,000 on November 5, 1,116,000 on November 6 after the circuit breaker* *Seoul listing, won per share. The November 6 figure is a morning quote just after the 9:03 a.m. circuit breaker, not a close. Sources: Zhitong Finance via KuCoin; HNGN; Herald Business. [4][5][8]* ## Seoul suspended the rule that manufactures forced sellers The policy answer came the same morning. At an emergency meeting on November 6 chaired by Deputy Prime Minister and Finance Minister Lee Hyoung-il, with the Financial Services Commission, the Financial Supervisory Service and the [Bank of Korea](https://theinference.org/markets/companies/bank-of-korea) present, the government [exempted brokerages from the mandatory 140% collateral maintenance ratio on margin loans](https://www.msn.com/en-xl/news/other/breaking-government-waives-140-collateral-ratio-for-securities-firms/ar-AA2gRDJz) for three months starting November 9 [2][3]. Under that rule, an investor whose collateral falls below 140% and misses the top-up deadline leaves the brokerage no choice but to sell at the next open; Seoul ran the same waiver for three months in July 2022 [2]. The government called the domestic market "overly reactive to external factors" and warned against "excessive pessimism driven by undue anxiety" [2]. ## The selling was foreign and mechanical The KOSPI fell as much as 8.8% to 4,911.28, below 5,000 for the first time since February 6, [tripping a circuit breaker at 9:03 a.m. that halted trading for 20 minutes](https://biz.heraldcorp.com/article/10928397), the 11th this year [9][4]. The index first crossed 9,000 in June [5]. [Foreign investors sold a net 3.4 to 3.8 trillion won on Thursday, taking five-session selling to 9.3 trillion won](https://theinference.org/article/foreign-funds-dumped-17-2tn-of-sk-hynix-and-samsung-in-a-month-while-both-lined-up-new-fabs), while domestic retail and institutions were net buyers on Friday morning [1][5][4]. ## The trigger came from Wall Street, not Seoul New York set it off: [the S&P 500 fell 4.36%, the Nasdaq 5.52% into correction, and the Philadelphia Semiconductor Index 12.25%](https://finance.yahoo.com/markets/world-indices/articles/wall-street-ai-sell-off-012837647.html), its worst day since March 2020, after Democrats swept Congress and Texas governor-elect Gina Hinojosa vowed to "stop what we are doing with data centers" [1][6]. *Chart: **Chips led the rout on both sides of the Pacific** Ranked bars of one-day percentage falls: Philadelphia Semiconductor Index 12.25%, SK hynix 11.71%, Samsung Electronics 9.98%, KOSPI 8.8%, Nasdaq 5.52%, S&P 500 4.36%* *One-day percentage falls. Seoul figures are Friday morning quotes just after the 9:03 a.m. circuit breaker; the KOSPI figure is its intraday low; US figures are Thursday's close. Sources: Herald Business; Yahoo Finance (BeInCrypto); CNBC. [4][9][1][6]* Japan's Nikkei entered bear-market territory, more than 20% below its June peak [6]. [Goldman Sachs](https://theinference.org/markets/companies/goldman-sachs)' Asia-Pacific equity strategist Timothy Moe named position unwinding and stop-loss selling, not earnings, as the driver [10]. ## The order book still says sold out Daishin Securities analyst Lee Gyeong-min holds that a sweeping federal construction halt "remains limited" [4]. SK hynix says demand outruns supply through 2030, and 14 customers hold long-term contracts over more than half its 2027 and 2028 capacity [7][8]. The crack sits in its own income statement: [net profit missed estimates on an 11.6 trillion won currency loss and an about 22.9 trillion won impairment](https://www.kucoin.com/news/flash/sk-hynix-posts-record-q3-earnings-wall-street-upgrades-outlook) tied to Kioxia [8]. ## Monday's open is the tell Watch whether Seoul activates its stock-market stabilization fund or bans short selling, steps participants expect it may take [5], and where the selling lands. If it clusters at the open, it is mechanics; if it runs all session, it is the demand story. The clock Seoul set itself expires in February, and [officials say more measures are ready](https://finance.yahoo.com/markets/stocks/articles/korea-eases-margin-trading-rules-041838632.html) [2][3]. ## Takeaway Seoul's three-month waiver of the 140% margin rule is a bet that forced liquidation, not AI demand, drove the rout; whether selling clusters at Monday's open will tell. ## Sources 1. [Yahoo Finance (BeInCrypto), Wall Street's AI Sell-Off Spills Into Seoul, Sinking KOSPI Below 5,000, 5 November 2026](https://finance.yahoo.com/markets/world-indices/articles/wall-street-ai-sell-off-012837647.html) 2. [The Chosun Ilbo (via MSN), Government waives 140% collateral rule for securities firms, 6 November 2026](https://www.msn.com/en-xl/news/other/breaking-government-waives-140-collateral-ratio-for-securities-firms/ar-AA2gRDJz) 3. [Yahoo Finance (Investing.com), S. Korea eases margin trading rules to stem forced stock sales, 5 November 2026](https://finance.yahoo.com/markets/stocks/articles/korea-eases-margin-trading-rules-041838632.html) 4. [Herald Business, Kospi breaks below 5,000 for first time in 9 months as AI selloff triggers circuit breaker within 3 minutes of open, 6 November 2026](https://biz.heraldcorp.com/article/10928397) 5. [HNGN, Kospi Halts After Plunge as Samsung, SK hynix Lead AI Rout, 5 November 2026](https://www.hngn.com/articles/273721/20261105/kospi-halts-after-plunge-samsung-sk-hynix-lead-ai-rout.htm) 6. [CNBC, Stock futures mixed after Nasdaq correction; Japan's Nikkei 225 enters bear market: Live updates, 5 November 2026](https://www.cnbc.com/2026/11/05/stock-market-today-live-updates.html) 7. [Coinpedia, SK Hynix Stock Jumps After Record Q3 Earnings: What Investors Need to Know, 28 October 2026](https://coinpedia.org/stock-market-news/sk-hynix-stock-jumps-after-record-q3-earnings-what-investors-need-to-know/) 8. [Zhitong Finance via KuCoin, SK Hynix Reports Record Q3 Earnings; Wall Street Upgrades Outlook, 28 October 2026](https://www.kucoin.com/news/flash/sk-hynix-posts-record-q3-earnings-wall-street-upgrades-outlook) 9. [Yahoo Finance (Investing.com), Asia stocks tumble as AI rout batters Japan, S. Korea, 5 November 2026](https://finance.yahoo.com/markets/world-indices/articles/asia-stocks-tumble-ai-rout-034250084.html) 10. [Unite.AI, Asian AI and Chip Stocks Tumble on US Data-Center Fears, 6 November 2026](https://www.unite.ai/asian-ai-and-chip-stocks-tumble-on-us-data-center-fears/) --- Seoul suspends its 140% margin rule for three months as SK hynix falls 11.7% despite a record quarter — The Inference. Canonical: https://theinference.org/article/seoul-suspends-its-140-margin-rule-for-three-months-as-sk-hynix-falls-11-7-despite-a-record-quarter