KOSPI, Kosdaq Trigger Back-to-Back Sell Sidecars as Panic Selling Deepens

South Korean stocks tumbled on July 8, triggering sell sidecars in the KOSPI and Kosdaq markets in quick succession.

The Korea Exchange suspended program sell orders in the KOSPI market for five minutes at 1:31:58 p.m. after a sharp drop in KOSPI 200 futures. At the time, the KOSPI 200 futures index stood at 1,174.36, down 64.64 points, or 5.21%, from the previous close. A sell sidecar for the KOSPI market is triggered when KOSPI 200 futures fall more than 5% and remain at that level for at least one minute.

Shortly afterward, at 1:33:58 p.m., a sell sidecar was triggered in the Kosdaq market. At the time of the trigger, Kosdaq 150 futures were down 6.31% from the previous close at 1,372.60. The Kosdaq 150 spot index had fallen 6.76% to 1,365.13.

A Kosdaq sell sidecar is activated when Kosdaq 150 futures fall more than 6% from the benchmark price and the Kosdaq 150 index drops more than 3% from the previous trading day's closing level, with both conditions persisting for one minute. The back-to-back sidecars were intended to prevent the futures-market slump from rapidly spreading across the broader cash market.

The selloff came as investor sentiment weakened amid rising tensions between the US and Iran over the Strait of Hormuz. On July 7, after Iran attacked three vessels passing through the strait, US Central Command said it had launched heavy airstrikes against Iran in response.

Market concern over the view that semiconductor stocks may have peaked also added pressure. Morgan Stanley said momentum in chip stocks was weakening as investors shifted into relatively lagging sectors, including hyperscalers, or operators of large-scale data centers.

Although market safeguards were activated, investor anxiety showed little sign of easing. A five-minute halt in program trading does not remove underlying selling pressure. Late-session supply and demand, along with trading by foreign and institutional investors, will be key in determining the market's direction for the rest of the day.

Kang Kyung-ju, Hankyung.com reporter, qurasoha@hankyung.com