On the 26th, the KOSPI plunged more than 7% intraday, triggering a temporary suspension of program sell quotes (sidecar). Just a day after a buy sidecar was triggered on the previous day's KOSPI surge, the opposite measure was activated, showing extreme expansion in market volatility. The KOSPI index was pushed down to the 8,300 level intraday.
According to the Korea Exchange (KRX), at around 11:12 a.m. the effect of program sell quotes was suspended for five minutes due to a sharp drop in the KOSPI 200 futures index. At the time of activation, the KOSPI 200 futures index was down 72.88 points (5.00%) from the previous day's close at 1,382.00.
A sidecar is a system that suspends the effect of program trading quotes for five minutes if the KOSPI 200 futures price rises or falls by 5% or more from the previous close and that state lasts for at least one minute. Buy quotes are limited during a surge, and sell quotes are limited during a plunge. This is the 14th sidecar this year and the fifth this month.
As of 11:53 a.m., the KOSPI is trading at 8,286.09, down 644.21 points (7.21%) from the previous session. Starting at the 8,800 level, the KOSPI's intraday decline expanded quickly and it was pushed down to the 8,300 level.
By investor type, selling by foreigners and institutions is strong. In the main board, foreigners and institutions are net sellers of 2.8 trillion won and 580 billion won, respectively, while individuals alone are net buyers of 3.35 trillion won. Among institutions, the national pension funds are also net selling 79 billion won worth.
Top market-cap stocks are broadly weaker. Samsung Electronics and SK hynix are both down around 8%, and SK Square is also down nearly 11%.
It is seen as the result of foreigners' profit-taking after the recent surge overlapping with weakness in U.S. tech stocks, which dented investor sentiment. Overnight on Wall Street, Apple fell more than 6% after it unveiled plans to raise product prices due to higher memory costs, and investment sentiment toward the broader semiconductor sector also weakened somewhat.
Han Ji-young, a researcher at Kiwoom Securities, said, "Overnight in the U.S. market, Apple shares plunged in the 6% range, and the backdrop was anxiety about a contraction in final set demand due to news of product price hikes following higher memory prices," adding, "This created noise that not only consumer sectors like Apple but also hyperscaler companies may find it hard to absorb higher memory prices, potentially dampening their willingness to pursue capital expenditure (CAPEX)."
Han added, "On the 2 previous sessions, the KOSPI rebounded about 8.9%, unleashing short-term profit-taking, and the side effects of the semiconductor concentration also appear to have resurfaced."
The KOSDAQ is also extending losses. At the same time, the KOSDAQ index is trading at 849.59, down 38.22 points (4.30%) from the previous session. While foreigners and institutions are net buying 81.8 billion won and 240 billion won, respectively, individuals are net selling 320 billion won.
While most top market-cap stocks are falling around 6% to 7%, semiconductor materials, parts, and equipment stocks are relatively strong. Wonik IPS, PSK, EO Technics, and SIMMTECH are continuing to rise.
The won-dollar exchange rate is also soaring to 1,549 won, threatening the 1,550-won level.