Kospi Sinks 5.8% to 8,400 Level as Circuit Breaker Halts Trading
Summary
- The Kospi plunged 5.8%, retreated to the 8,400 level, and saw volatility intensify as a circuit breaker and sidecar were triggered.
- Foreign and institutions were net sellers of 4.627 trillion won and 3.785 trillion won, respectively, while retail investors were net buyers of 8.193 trillion won.
- An analyst said concerns over weaker demand for memory chips were excessive and that maintaining a holding strategy remained appropriate.
Forecast Trend Report by Period
Sidecar triggered for the 29th time this year; circuit breaker activated for the fifth time
Kosdaq drops more than 4%, slipping below 850
South Korea’s Kospi index tumbled 5.8% on June 26, falling back to the 8,400 level.
The benchmark closed at 8,411.21, down 519.09 points, or 5.81%, from the previous session. As losses deepened during the session, a sell-side sidecar — a temporary suspension of program sell orders — and a circuit breaker that halted trading for 20 minutes were triggered.
Foreign and institutional investors led the selloff. Samsung Electronics and SK Hynix, the market’s two semiconductor heavyweights, paced the decline with sharp losses, apparently as investors locked in profits after a recent rally.
The Korea Exchange triggered a sell-side sidecar at about 11:12 a.m. The mechanism is activated when the price of the most actively traded Kospi 200 futures contract drops more than 5% from the previous session and stays there for at least one minute. Sidecars have been triggered 29 times this year, including 14 sell-side and 15 buy-side activations.
A first-stage circuit breaker was triggered at about 12:10 p.m. It is activated when the Kospi falls more than 8% from the previous session and remains there for at least one minute. It was the fifth circuit breaker this year.
Profit-taking orders poured in after the Nasdaq Composite fell overnight in New York and the Kospi had risen over the previous two sessions. On the main board, foreign investors were net sellers of 4.627 trillion won and institutions sold a net 3.785 trillion won. Retail investors were net buyers of 8.193 trillion won.
Samsung Electronics and SK Hynix both ended lower. Samsung Electronics fell 19,000 won, or 5.30%, to 339,500 won. SK Hynix dropped 244,000 won, or 8.36%, to 2.673 million won.
Other large-cap stocks also fell, including SK Square, down 9.43%; LG Energy Solution, down 5.82%; Samsung C&T, down 4.72%; Hyundai Motor, down 4.47%; Samsung Life Insurance, down 3.24%; Samsung Biologics, down 3.10%; HD Hyundai Heavy Industries, down 3.09%; and Samsung Electro-Mechanics, down 0.20%.
Han Ji-young, an analyst at Kiwoom Securities, cited concerns over weaker memory-chip demand, profit-taking after sharp gains over the previous two sessions, and the side effects of heavy concentration in semiconductor shares as reasons for the slump. He said worries about memory-chip demand were overdone. In practice, concentration in a narrow group of stocks and the resulting volatility in market flows explained most of the day’s drop, he added. Han said he still viewed a holding strategy as appropriate at this point.
The Kosdaq index also fell more than 4%, slipping back below the 850 level. It closed at 851.37, down 36.44 points, or 4.10%, from the previous session. On the Kosdaq market, retail investors were net sellers of 668 billion won, while foreign and institutional investors were net buyers of 351 billion won and 308 billion won, respectively.
The won finished the daytime session at 1,532.0 per dollar in Seoul, down 10.7 won from the previous session.
Lee Su, Hankyung.com reporter 2su@hankyung.com
Korea Economic Daily
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