The previous day, the KOSPI index plunged more than 10%, triggering the eighth circuit breaker this year. There have been 14 circuit breakers on the main board to date, and eight of them were triggered this year. In particular, five of the eight this year were found to be directly tied to negative news on semiconductor stocks.
According to the Korea Exchange (KRX) on the 29th, this year's circuit breakers on the main board were mainly driven by the fallout from the U.S.-Iran war and a sharp sell-off in semiconductor stocks.
The first trigger came on Mar. 4, when a military clash broke out between the United States and Iran. As the military conflict flared over the weekend between the United States and Iran, the KOSPI fell 12.06%, sliding straight down to the 5,000 level. Then on Mar. 9, the second circuit breaker was triggered as international oil prices surged on fears of a prolonged war. The KOSPI closed down 5.96% that day.
After a rising market, circuit breakers were tripped three times each in June and July. In June (on the 8th, 23rd, and 26th), the instability in U.S. markets largely spilled over into the domestic market.
On June 8, stronger-than-expected U.S. jobs data fueled concerns that the Federal Reserve would speed up rate hikes, which weighed on semiconductor stocks. As anxiety spread that prolonged high rates could curb big tech's AI and server capital spending (CAPEX), profit-taking swept across global semiconductor names including Nvidia, Samsung Electronics, and SK hynix.
On the 23rd, it largely reflected a technical correction after a drop in U.S. tech stocks the previous day, and on the 26th, trading was halted as investor sentiment cooled rapidly after Apple announced price hikes for its products citing higher memory chip prices.
Even in July, when the domestic market entered a full-fledged correction phase, a total of three circuit breakers were triggered. The first in July, on the 7th, was the day Samsung Electronics(005930) released its preliminary second-quarter results. Samsung Electronics reported record results, becoming the company with the highest quarterly profit in the world, but a wave of profit-taking poured in on worries that the semiconductor supercycle may have peaked.
Then on the 13th, a circuit breaker was also tripped as geopolitical risks and negative news on semiconductors overlapped. The exchange said the market wobbled that day as "geopolitical risks in the Middle East expanded," but it appears semiconductor stocks had a bigger impact.
Over that weekend, SK hynix(000660) American depositary receipts (ADR) successfully listed on the Nasdaq, but the common shares in the domestic market plunged more than 15%. After the SK hynix ADR listing, profit-taking emerged, and mounting pressure over second-quarter results appeared to dampen investor sentiment.
On the 28th, when the eighth circuit breaker of the year was triggered, negative news on semiconductors out of China again rattled the market. Concerns over a "Chinese semiconductor uprising" spread on news that a Chinese chip equipment maker had begun mass production of deep ultraviolet (DUV) lithography systems and that Changxin Memory Technologies (CXMT) was surging. Samsung Electronics and SK hynix plunged 13% and 14%, respectively, that day.
A circuit breaker is a system that halts all stock trading for 20 minutes when the KOSPI falls 8% or more from the previous close for at least one minute. Before trading resumes, orders are collected for 10 minutes and then matched at a single price.