KOSPI fell below the 7,000 mark intraday, triggering the seventh circuit breaker of the year. As geopolitical tensions between the United States and Iran flared again, foreigners and institutions embarked on heavy selling, sending the index sharply lower. It is the first time in about two months since May 4 that KOSPI has slipped below 7,000 during trading.
According to the Korea Exchange (KRX) on the 13th, a level-1 circuit breaker (CB) was triggered on the stock market at 1:28:32 p.m. With KOSPI down more than 8% from the previous session's close for over one minute, trading on the stock market was halted for the next 20 minutes. At the time of activation, KOSPI was down 8.08% at 6,871.20 from the previous day.
As of 1:52 p.m., KOSPI was down 594.97 points (7.96%) at 6,880.97 from the previous session. The index opened down 63.91 points (0.85%) at 7,412.03, then deepened losses and slid to as low as 6,861.60 intraday.
Flows showed foreigners and institutions leading the decline. Foreigners recorded net selling of 2.23 trillion won and institutions about 570 billion won, while individuals absorbed supply with nearly 2.7 trillion won in net buying. Among institutions, the national pension funds were net buyers of about 220 billion won.
It is the first time since May 4 that KOSPI has fallen below the 7,000 mark during trading. At that time, KOSPI fell to as low as 6,741.63 intraday before finishing the transaction at 6,936.99.
Recently, the domestic stock market has swung between sharp gains and steep losses, maintaining extreme volatility. In the morning, the 18th sell-side sidecar of the year was triggered, and in the afternoon even a circuit breaker kicked in. This year on the stock market, there have been 17 buy-side sidecars and 18 sell-side sidecars, for a total of 35 sidecars.
Large-cap semiconductor stocks also fell sharply. Samsung Electronics and SK hynix(000660) were down around 9% and 13%, respectively, just before the circuit breaker, while SK Square and Samsung Electro-Mechanics also plunged 15%–18%.
SK hynix tumbled despite strong demand for its ADR on its first day of listing on the Nasdaq in the United States. Profit-taking emerged after the event ended, and investor sentiment was seen weakening on concerns about dilution of existing shareholders' equity, as the ADR was issued through a new share offering rather than a sale of existing shares.
Kim Seok-hwan, an analyst at Mirae Asset Securities, said, "As expectations for SK hynix's ADR listing, which had driven the recent share-price gains, materialized, profit-taking pressure emerged with the event fading, and concerns that second-quarter results may fall short of the market's heightened expectations appear to have added to the impact."
Han Ji-young, an analyst at Kiwoom Securities, said, "Because the domestic market's structure has an exceptionally large semiconductor share of total market cap, when semiconductor stocks wobble, the entire index inevitably feels the impact," adding, "On top of that, supply-demand distortions centered on single-stock leveraged ETFs are also acting as a factor amplifying volatility."
Concerns that the memorandum of understanding (MOU) for ending the war, which the United States and Iran had reached in dramatic fashion, could effectively be nullified also weighed on investor sentiment. As tensions in the Middle East flared again, risk-off sentiment appeared to spread.
In addition, with some foreign institutions raising the possibility of arbitrage in the form of "ADR buying–short selling of the domestic underlying," analysts said sentiment toward the domestic underlying also deteriorated.
At the same time, the KOSDAQ index also weakened in tandem, down 36.72 points (4.38%) at 800.71 from the previous session. During trading, it slipped to 800.19, threatening the 800 level.
On the KOSDAQ market, individuals and institutions were net buyers of 188 billion won and 166 billion won, respectively, while foreigners led the decline with 350 billion won in net selling.