KOSPI 8% plunge and circuit breakers triggered, down 1,300points over three days
6Month 8day's “Black Monday” sent KOSPI 8% lower, triggering a circuit breaker, while KOSDAQ closed down 9%. With the shock to the U.S. semiconductor sector acting as a catalyst, forced liquidations by individual investors and selling pressure weighed on trading.
6Month 8day saw a “Black Monday” in South Korea’s stock market. KOSPI fell sharply during the session and ultimately closed down 8%. The KOSDAQ index also declined, falling 9%.
A circuit breaker was triggered as the decline widened. The intraday fall in the index pushed KOSPI below the 8,000 level. Selling pressure continued even after trading resumed.
The cumulative decline over three days was also substantial. Based on market indicators, about 1,300 points were lost over three days. The sharp stock-market drop led to broad-based selling pressure after the morning session.
The sharp decline in the U.S. semiconductor sector was reportedly linked to the local market and affected the domestic market. Some investors reportedly viewed the plunge as an opportunity to buy at a discount. Meanwhile, individual investors with large holdings were reportedly subject to forced liquidation following margin calls.
At the scene, securities firms saw order cancellations and a concentration of liquidity. There were reports that program trading and the share of foreign selling had increased. After the market close, the relevant institutions are expected to make additional disclosures and conduct internal reviews.
Amid heightened stock-market volatility, risk management related to trading and checks of account balances are being recommended. Some accounts reportedly received additional margin calls and underwent position reductions. The future disclosure schedules and earnings announcements of the companies involved are likely to have a significant impact on the market's response.