Korea's stock market opened sharply lower on the 19th as U.S. Government Bonds yields hit a 19-year record high. A sell-sidecar (temporary halt of program sell quotes) was triggered on the Korea Composite Stock Price Index (KOSPI) just over five minutes after the open. High real interest rates increase corporations' financing expense while lifting the discount rate on stocks, weighing on the market.

On the morning of the 19th, a status board in the Hana Bank dealing room in Jung-gu, Seoul displays the market, including KOSPI. KOSPI falls by around 5–6% early in the session, triggering a sidecar at 9:06:02 a.m. /Courtesy of News1.

The Korea Exchange (KRX) triggered a sell-sidecar on the KOSPI at 9:06 a.m. that day. When a sell-sidecar is triggered, program trading sell quotes are halted for five minutes. Program trading volume at the time was a net sell of 350.5 billion won.

A sell-sidecar on the KOSPI is a market-stabilizing mechanism that is triggered when futures based on the KOSPI 200, an underlying asset, fall more than 5% and remain there for over one minute. At the time, Mini KOSPI200 futures were trading at 1,013.26, down 6.02% from the previous transaction day.

So far this year, sell-sidecars on the KOSPI have been triggered 25 times. It was the first sell-sidecar in eight transaction days since on the 6th. Including 23 buy-sidecars, the total number of sidecar activations comes to 48.

U.S. Government Bonds yields, which have surged to a 19-year record high, are undermining investor sentiment. According to the Wall Street Journal (WSJ) and other foreign media on the 18th (local time), the 30-year U.S. Government Bonds yield rose to as high as 5.33% intraday. It is the highest level in 19 years since 2007. When market rates rise, they increase corporations' financing expense and raise stock discount rates, typically acting as a headwind for equities.

Behind the rise in yields are changes in the buyers of Government Bonds and long-term issuance by global big tech. Bloomberg said that in the past, U.S. Government Bonds were bought by institutional investors relatively insensitive to price changes, but recently they have shifted to private investors sensitive to revenue. In addition, as big tech issues ultra-long 30-year bonds, analysts say the supply and demand for Government Bonds is being dispersed.

As a result, New York stocks fell across the board the previous night. On the 18th (local time), the Dow Jones Industrial Average ended at 53,343.40, down 0.22% from the previous transaction day. The Standard & Poor's (S&P) 500 fell 0.69% to 7,691.76, and the Nasdaq composite closed down 1.33% at 26,289.71.

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