‘Black Monday’ Hits Kospi as Index Sinks 4.5%, Triggers Sell Sidecars

South Korea’s stock market suffered a “Black Monday” on July 20, the first trading day after the Constitution Day holiday. The Kospi slumped more than 4% to the 6,500 level, and sell sidecars — a temporary suspension of program sell orders — were triggered on both the KOSPI and Kosdaq markets.

The Kospi closed at 6,516.27, down 304.33 points, or 4.46%, from the previous session. After opening with a drop of more than 2%, the index extended its losses and at one point fell into the 6,400 range. A sell sidecar was triggered at about 11:21 a.m. On the KOSPI market, a sell sidecar is activated when the price of the most actively traded Kospi 200 futures contract falls more than 5% from the previous session and remains there for 1 minute.

The selloff came after US stocks, led by semiconductor shares, weakened late last week and military tensions in the Middle East flared up again.

Han Ji-young, an analyst at Kiwoom Securities, said the Kospi this week could enter a period of testing downside support. Drivers include weakness in US and Japanese chip stocks during the holiday period, geopolitical tensions between the US and Iran, earnings from major US tech companies including Alphabet, Intel and Tesla, results from major South Korean companies such as Hyundai Motor, Doosan Enerbility and KB Financial, and changes in trading flows after the announcement of regulations on single-stock leveraged exchange-traded funds.

On the KOSPI market, institutions were net sellers of 920.3 billion won. Retail and foreign investors were net buyers of 349.5 billion won and 523.5 billion won, respectively.

Samsung Electronics Co. and SK Hynix Inc., the market’s two biggest semiconductor stocks, both fell sharply. Samsung Electronics dropped 11,000 won, or 4.31%, to 244,000 won, while SK Hynix lost 78,000 won, or 4.23%, to 1.764 million won.

Most large-cap stocks also declined, including Samsung Life Insurance, down 8.91%; KB Financial, down 6.79%; Kia, down 6.48%; Hyundai Motor, down 6.12%; LG Energy Solution, down 4.94%; Samsung Biologics, down 3.65%; SK Square, down 2.89%; and Samsung Electro-Mechanics, down 0.16%.

The Kosdaq dropped more than 5% to the 740 level. The index closed at 749.64, down 42.20 points, or 5.33%, from the previous session. A sell sidecar was also triggered at about 10:52 a.m. On the Kosdaq market, a sell sidecar is activated when Kosdaq 150 futures fall more than 6% from the previous day and the Kosdaq 150 index drops more than 3%, with the move sustained for 1 minute.

On the Kosdaq, foreign investors and institutions were net sellers of 61.8 billion won and 134.7 billion won, respectively. Retail investors were net buyers of 190.7 billion won.

Most of the Kosdaq market’s biggest stocks fell, including Wonik IPS, down 18.19%; PSK, down 12.59%; Jusung Engineering, down 10.64%; EcoPro, down 8.13%; EcoPro BM, down 7.38%; Rainbow Robotics, down 5.54%; LEENO Industrial, down 4.43%; Alteogen, down 2.53%; and Kolon TissueGene, down 1.45%. Samchundang Pharm, meanwhile, surged 29.82%.

Lee Su, Hankyung.com reporter 2su@hankyung.com