On the 3rd, as the KOSPI index fell more than 7% and a KOSPI sell-sidecar was triggered, an analysis from the securities industry said the decline was recovered on average 23 days after a sidecar was triggered.

On the 3rd, as the KOSPI 6000 level collapses amid the fallout from the Iran war, the KOSPI closing price is displayed on the dealing room ticker at the Woori Bank headquarters in Jung-gu, Seoul. The KOSPI closes at 5,791.91, down 452.22 points (7..24%) from the previous trading day. /Courtesy of News1

A sidecar is a system in which, when there is a sharp rise or fall in the futures market, the effectiveness of program-trading quotes in the cash market is suspended for five minutes to prevent disorder.

According to Meritz Securities, since 2010, KOSPI sell-sidecars have been triggered a total of eight times.

Lee Sang-hyun, a Meritz Securities researcher, said, "In four out of eight cases, a buy-sidecar followed within 10 trading days," and noted, "Once uncertainty over the major events that sparked the market plunge eased somewhat, it led to another sharp rally in the index."

According to Meritz Securities, on average the index fully recovered the decline on the day the sidecar was triggered after 23 trading days had passed.

The researcher analyzed, "Then, by 44 trading days, the index rebounded 5%, showing a trend of waning risk aversion toward the uncertainty that led to the sidecar trigger."

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