After surging 6% the previous day, the KOSPI index plunged 6% on the 16th, slumping back to the 6,800 level. As the index tumbled, sell-sidecars were triggered in succession on the Korea Exchange main board and the KOSDAQ market.
The market fell sharply as semiconductor stocks, which have a large weight in the domestic market, plunged. The KOSPI index closed at 6,820.6, down 6.37% (463.81 points) from the previous trading day. The KOSPI started at 6,960.50 but widened its losses, at one point falling more than 7% intraday.
The KOSDAQ index closed at 791.84, down 4.53% (37.59 points) from the previous day. The KOSDAQ opened at 813.32, but as the decline deepened it failed to hold the 800 level.
As selling by foreigners and institutions intensified during the morning session, sell-sidecars were triggered in both markets. The Korea Exchange (KRX) triggered a sell-sidecar on the main board at 9:10 a.m., and on the KOSDAQ market at 10:20 a.m.
As a result, this week's market recorded unprecedented volatility, with sidecars and circuit breakers triggered on three out of four trading days.
Selling by foreigners and institutions dragged the market down. On the main board, foreigners and institutions were net sellers of 1.9288 trillion won and 3.0537 trillion won, respectively. Individuals alone were net buyers of 4.7816 trillion won.
In the KOSDAQ market, individuals alone were net buyers of 508.3 billion won, while foreigners and institutions sold 370.3 billion won and 157.9 billion won.
With negative news on semiconductors continuing in the U.S. market the previous day, it is assessed to have also hit the domestic market. News emerged that construction of data centers in New York would be halted due to power supply and environmental issues. There was also word that CoreWeave, a U.S. artificial intelligence (AI) cloud company, is reviewing a hedging strategy using put options to guard against the risk of falling memory prices.
Lee Kyung-min, a researcher at Daishin Securities, said, "The domestic market plunged, led by Samsung Electronics and SK hynix, on renewed concerns about the semiconductor cycle."
Kang Jin-hyeok, senior researcher at Shinhan Investment & Securities, said, "Overnight in the U.S., the index rose on big tech and financial strength, but memory stocks plunged on semiconductor noise," adding, "As AI value-chain plays such as Samsung Electronics and SK hynix slumped, a sell-sidecar was triggered."
Samsung Electronics(005930) fell 8% on the day, and SK hynix(000660) fell more than 11%. SK Square(402340), which holds equity in SK hynix, also dropped more than 12%.
Kang, the senior researcher, said, "In the case of the KOSDAQ index, amid the spillover from the sell-sidecar triggered on the KOSPI, profit-taking took place in large caps such as materials, parts and equipment plays and robot stocks that had surged the previous day."