Kospi Falls More Than 5%, Triggering Sell-Side Sidecar for First Time in Nearly Two Months

The Kospi fell more than 5% as heavyweight semiconductor stocks slumped in tandem, triggering a sell-side sidecar on South Korea’s main stock market.

The Korea Exchange said program sell orders on the Kospi were temporarily suspended at 9:47 a.m. on October 13 after a sharp drop in Kospi 200 futures. The contract was down 5.08% from the previous session at 995.02. The sell-side sidecar was triggered after the decline of more than 5% was sustained for one minute. It was the first such action on the benchmark stock market since August 20, nearly two months ago.

As of 10:04 a.m., the Kospi was down 339.39 points, or 5.32%, at 6,044.85. Heavy foreign selling drove the decline. Foreign investors were net sellers of 1.45 trillion won in the main board and also posted net selling of 212.6 billion won in Kospi 200 futures. Retail and institutional investors, by contrast, were net buyers of 1.0937 trillion won and 348.6 billion won, respectively.

Losses were especially pronounced in semiconductor stocks. Samsung Electronics fell 5.99%, while SK Hynix dropped 7.79%. Investor sentiment weakened after China’s ChangXin Memory Technologies, or CXMT, announced progress in D-RAM technology development. News that server memory products using the technology could reach the market later this year fueled concerns that competition in global memory-chip supply may intensify.

Other large-cap stocks also weakened across the board. SK Square tumbled 9.76%, while Samsung Electro-Mechanics slid 7.13%, Hyundai Motor lost 5.78%, Samsung Life Insurance fell 5.05% and Samsung C&T dropped 4.93%. LG Energy Solution also declined 2.51%. Among financial shares, losses were relatively limited for KB Financial Group, down 1.41%, and Shinhan Financial Group, off 1.99%.

The Kosdaq index also fell. As of the same time, it was down 29.61 points, or 3.49%, at 819.58. On the Kosdaq market, retail investors were net sellers of 155.3 billion won, while foreign and institutional investors were net buyers of 149.2 billion won and 12.2 billion won, respectively. Selling spread beyond semiconductor materials, parts and equipment shares to secondary-battery and biotech names, pulling down most of the market’s biggest stocks.