The South Korean stock market experienced a significant downturn in early trading on Monday, as the Kospi index plummeted due to concerns over soaring oil prices potentially fueled by escalating tensions involving the US, Israel, and Iran. This market volatility triggered a sell-side sidecar mechanism to mitigate excessive fluctuations. Concurrently, the Korean won weakened considerably against the US dollar.
The Kospi began trading at 5,265.37, marking a 5.72 percent decrease from the previous trading day. The index continued its descent, reaching a low of 5,171.53 in the initial hours of trading.
As of 9:35 a.m. KST, the Kospi stood at 5,234.82, reflecting a 6.27 percent drop.
To address the sharp decline, a sell-side sidecar was activated on the main bourse at 9:06 a.m. KST. This action temporarily suspended program sell orders for a duration of five minutes. The sidecar is automatically triggered when Kospi 200 futures fall by 5 percent or more compared to the previous session’s close, and this decline persists for at least one minute.
At the time the sidecar was activated, Kospi 200 futures had fallen 6.49 percent.
The heavy losses in major technology stocks contributed significantly to the overall market decline. Samsung Electronics shares fell by 7.49 percent to 174,100 won ($116 USD), while SK hynix experienced a steeper drop of 8.23 percent, reaching 848,000 won.
Foreign and institutional investors drove the sell-off, divesting a net 873.5 billion won and 584.3 billion won worth of shares, respectively. In contrast, retail investors engaged in net buying, purchasing a net 1.44 trillion won.
The Kosdaq, known for its concentration of technology companies, also experienced a sharp decline, opening down 5.04 percent at 1,096.48. As of 9:35 a.m. KST, the index was at 1,100.92, a decrease of 4.66 percent from the previous session.
The Korean won’s value also weakened substantially. The currency opened at 1,493.0 won per dollar, a decrease of 16.6 won from the previous session.
This represents the weakest daytime trading level for the won since March 12, 2009, during the global financial crisis, when it briefly touched an intraday low of 1,500 won per dollar.
As of 9:35 a.m. KST, the won was trading at 1,494.38 per dollar.
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