Broken KOSPI hits 32nd sidecar and 6th circuit breaker [fn market close]

[Financial News] The KOSPI slid to the 7,600 level after Samsung Electronics released its preliminary earnings. Extreme volatility continued as a sell sidecar was followed by a level-1 circuit breaker mechanism.
According to the Korea Exchange on the 7th, the KOSPI closed at 7,656.31, down 4.91% from the previous session. The index opened at 7,919.20 but fell as low as 7,389.22 during the session. The KOSDAQ closed at 831.23, down 1.87% from the previous trading day.
In the KOSPI market, foreign investors drove the index lower by dumping a large amount of shares. They posted net sales of 2.9298 trillion won. Institutions also sold 309.2 billion won worth of shares. Retail investors, meanwhile, bought a net 3.1343 trillion won, helping cushion the crash.
Market stabilization measures were also triggered one after another. At 10:23 a.m., a sell sidecar was activated on the Korea Exchange Main Board. The trigger was met after the Mini KOSPI 200 futures price fell 5.12% from the reference price to 1,227.32 points. As a result, sell orders in program trading were suspended for five minutes. This was the 32nd sidecar activation on the main board this year.
At 1:51 p.m., a level-1 circuit breaker mechanism was triggered on the Korea Exchange Main Board. The KOSPI had fallen 649.77 points, or 8.07%, from the previous close to 7,401.56, meeting the activation threshold. Trading in listed stocks on the main board was halted for 20 minutes. It was the sixth circuit breaker this year and the 12th in history.
Major stocks by market cap also broadly weakened. Samsung Electronics closed at 296,000 won, down 6.92%, while SK hynix fell 6.06% to 2,201,000 won. Samsung Electro-Mechanics (-9.85%) and SK Square (-9.30%) plunged by nearly 10%, while Samsung Electronics Co., Ltd. Preferred Shares (-6.21%), LG Energy Solution (-6.35%), Hyundai Motor Company (-4.48%) and Samsung C&T Corporation (-5.56%) also ended lower. Samsung Biologics, however, rose 1.21% to 1,422,000 won.
At the center of the sharp decline was weakness in semiconductor stocks after Samsung Electronics released its preliminary earnings. Although Samsung Electronics' second and fourth quarter results were seen as beating market expectations, investors increasingly felt they still fell short of elevated hopes. After the earnings release, profit-taking spread across the semiconductor sector.
Han Ji-young, a researcher at Kiwoom Securities, said, "After Samsung Electronics' preliminary earnings, the market largely viewed it as a sell-on event in the short term, and distortions in supply and demand from single-stock leveraged products also helped accelerate the decline." She added, "Prolonged exposure to an abnormal volatility environment where sidecars have become routine has also increased fatigue among market participants."
However, Han cautioned, "It is necessary to avoid interpreting the recent rise in volatility as a structural downtrend in the index." She added, "Since the forward price-earnings ratio at the KOSPI 7,400 level has fallen to the lowest level since the financial crisis, maintaining existing stock exposure and positions may be a better strategy than panic selling."


fair@fnnews.com Han Young-joon Reporter