Kospi Drops 5% as 2.25 Trillion-Won Retail Buying Fails to Halt Selloff

Kospi drops more than 5%; sell-side sidecar triggered

South Korea’s Kospi index fell more than 5% during trading on July 7, sliding into the 7,600 range. The benchmark came under pressure as investors took profits even after Samsung Electronics reported record second-quarter earnings.

As of 10:36 a.m., the Kospi was down 419.01 points, or 5.2%, at 7,632.32. The index opened 1.64% lower and widened its loss to as much as 6% early in the session, briefly falling into the 7,500 range. At 10:23:41 a.m., program sell orders on the main board were halted for five minutes.

On the Kospi, foreign and institutional investors were net sellers of 1.6818 trillion won and 570.8 billion won, respectively. Retail investors were net buyers of 2.2181 trillion won, but that was not enough to stop the decline.

Investors appeared to be cashing in gains after Samsung Electronics released its second-quarter results. The company said consolidated revenue for the quarter rose 129.3% from a year earlier to 171 trillion won, while operating profit jumped 1,810.3% to 89.4 trillion won. Operating profit was well above the market consensus of 85 trillion won and exceeded the company’s full-year operating profit last year of 43.6011 trillion won, marking a record quarterly result.

Other top-10 Kospi stocks by market capitalization also fell, including SK Hynix, SK Square, Samsung Electro-Mechanics, Hyundai Motor, LG Energy Solution, Samsung Life Insurance, Samsung C&T, Samsung Biologics and KB Financial Group.

The Kosdaq index was down 10.82 points, or 1.28%, at 836.25 at the same time. The index opened 0.39% lower, turned briefly positive early in the session, then resumed falling at around 10:13 a.m.

On the Kosdaq, retail investors were net sellers of 222.8 billion won, while foreign and institutional investors were net buyers of 97.8 billion won and 128.8 billion won, respectively.

Among Kosdaq heavyweights, EcoPro BM, EcoPro, Rainbow Robotics, Wonik IPS and Leeno Industrial were lower, while Alteogen, Jusung Engineering, Kolon TissueGene, HLB, ABL Bio and LigaChem Bio were higher.

Ko Jung-sam, Hankyung.com reporter jsk@hankyung.com