South Korean Kospi Plunges 8% Amidst Foreign Selling, Triggering Circuit Breaker
The South Korean benchmark Kospi experienced a dramatic decline during Tuesday’s intraday trading, propelled by aggressive profit-taking. This significant market movement occurred just one day after SK hynix ascended to become the most valuable listed company on the exchange, setting the stage for volatility.
Opening 0.34 percent lower at 9,083.54, the Kospi index maintained a relatively flat trajectory in early trading hours before a sharp downturn commenced around noon.
A sell-side sidecar, a five-minute suspension of program trading, was activated at 11:40 a.m., signaling initial market stress. This was swiftly followed by a comprehensive marketwide circuit breaker at 2:33 p.m. as the Kospi plummeted by 8.11 percent to 8,375.31, leading the stock exchange to halt all trading for 20 minutes.
This marked the Kospi’s thirteenth sell-side sidecar activation and the fourth circuit breaker triggered within the current year, highlighting unusual market volatility.
Foreign investors aggressively divested 4.67 trillion won ($3.03 billion) worth of shares, while institutional investors also offloaded a net 2.56 trillion won. In contrast, retail investors emerged as the sole net buyers, acquiring a substantial 7.17 trillion won worth of stocks on the main board, attempting to capitalize on the dip.
Just prior to the circuit breaker’s activation, SK hynix shares saw a steep decline of 11.55 percent, falling to 2,582,000 won. This sharp drop came merely a day after the company surpassed Samsung Electronics in market capitalization for the first time in its history. Concurrently, Samsung Electronics’ stock shed 8.77 percent, closing at 322,500 won.
In the wake of these dramatic price adjustments, Samsung Electronics swiftly reclaimed its status as the Kospi’s most valuable company. Its market capitalization reached 1,882.5 trillion won, marginally surpassing SK hynix, which ended with a market cap of 1,856.5 trillion won.
The broader market witnessed widespread losses among large-cap stocks. SK Square experienced a 3.1 percent drop, settling at 1,899,000 won, while Samsung Electro-Mechanics tumbled significantly by 9.87 percent to 2,013,000 won.
The junior Kosdaq market was not immune, also succumbing to intense selling pressure. A sell-side sidecar was activated there earlier at 11:37 a.m. By 2:54 p.m., the Kosdaq index had fallen by 6.72 percent, reaching 903.29.
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