Bloomberg: "Panic in South Korean stocks… KOSPI falls even more than yesterday"

Source

Korea Economic Daily

Summary

Bloomberg reported that South Korea’s KOSPI slumped about 19% over two days, marking the biggest decline since the 2008 global financial crisis.
It said South Korean stocks fell into panic as a sell-sidecar and circuit breakers (CB) were triggered in succession in the KOSPI and KOSDAQ markets early in the session.
Bloomberg reported that a spike in oil prices due to the U.S.-Iran war and concerns over difficulties for South Korea, the world’s 8th-largest crude oil consumer, appeared to have led to capitulation selling.

Forecast Trend Report by Period

KOSPI plunges more than 12%… touches the 5,050 level

Bloomberg reported that South Korea’s KOSPI, which had been posting the world’s best gains, has plunged for a second straight session amid the Middle East crisis, tipping the market into “panic.”

As of noon on the 4th, the KOSPI was down more than 12%, a larger drop than the previous session’s decline (7.24%). The index fell more than 700 points in a single day, sliding intraday to the 5,050 level. Over two days, the KOSPI has slumped about 19%, marking its biggest two-day drop since the 2008 global financial crisis.

Early in the session, a sell-sidecar was triggered in the KOSPI and KOSDAQ markets. Then, around 11:17 a.m., circuit breakers (CB) were activated in both markets. This was the first time in about 1 year and 7 months since August 2024. In August 2024, circuit breakers were triggered in the KOSPI and KOSDAQ markets as concerns over a U.S.-led economic downturn came to the fore.

A first circuit breaker is triggered when the stock index falls more than 8% from the previous day’s close, halting trading for 20 minutes. If, after the first circuit breaker ends, the index falls more than 15% versus the previous day’s close, a second circuit breaker is triggered. If, after the second ends, the index drops more than 20% from the previous day’s close, a third circuit breaker is triggered and trading for the day ends.

South Korea’s stock market has been gripped by panic, prompting a wave of capitulation selling. Fueled by the artificial intelligence boom, Korean equities had surged, with the KOSPI jumping about 50% year-to-date—enough to post the world’s best performance.

However, Bloomberg said the sell-off appears to have been driven by concerns that South Korea, the world’s eighth-largest consumer of crude oil, would face major difficulties as oil prices surged amid the U.S.-Iran war.

Park Subin, Hankyung.com reporter waterbean@hankyung.com