Black Monday: KOSPI 8% plunge triggers a circuit breaker
In today's session, the KOSPI fell 8%, triggering a circuit breaker, while the KOSDAQ declined 9%. Some investors faced forced liquidation due to selling pressure triggered by a shock involving U.S. semiconductor-related stocks and the burden of margin requirements.
In today's session, the KOSPI fell 8%, triggering a circuit breaker. After trading was temporarily suspended, the market fell sharply. At the same time, the KOSDAQ declined 9%, marking a steep drop. Selling pressure from investors intensified as major indexes plunged.
Over the three-day period, the index fell by a cumulative total of about 1,300points. The sharp decline was linked to a shock in the semiconductor sector that occurred in the United States. Simultaneous selling by foreign investors and institutions was observed. Declines centered on major semiconductor stocks amplified the index's fall.
Cases of forced liquidation were reported in accounts using leverage among individual investors. Automatic sell orders triggered by margin calls were applied to some investors' accounts. During the sharp market decline, some accounts saw their positions reduced due to insufficient reserve margin. Losses expanded in accounts with a high proportion of margin loans.
Meanwhile, some investors described the decline in semiconductor stocks as a “discount buying opportunity.” Some also recommended a buying approach, citing optimism related to AI. On the other hand, voices urging a cautious response were also heard. Market participants’ views were divided.
The exchange halted trading during the session in accordance with circuit breaker rules. No additional measures or regulatory changes have been announced so far. Investors are understood to be reviewing their account margins and held positions. Subsequent market direction may be influenced by global semiconductor-related news and foreign investors’ trading trends.