The trading board at Hana Bank's headquarters in Seoul displays the Kospi and other market indicators on Tuesday. The Kospi closed down 732.09 points, or 10.84 percent, at 6,023.66, while the Kosdaq fell 59.01 points, or 7.72 percent, to 705.85. [Yonhap]
The trading board at Hana Bank's headquarters in Seoul displays the Kospi and other market indicators on Tuesday. The Kospi closed down 732.09 points, or 10.84 percent, at 6,023.66, while the Kosdaq fell 59.01 points, or 7.72 percent, to 705.85. [Yonhap]

South Korea's stock market descended into panic once again Tuesday. Investor sentiment froze sharply, led by a selloff in semiconductor shares, as the Kospi broke below the psychologically critical 6,000 level. Sidecar and circuit-breaker mechanisms were triggered in rapid succession from the opening bell, leaving the market gripped by extreme volatility throughout the session.

Virtually every sector fell without exception, making it one of the broadest market routs in recent memory.

The Kospi closed at 6,023.66, down 732.09 points, or 10.84 percent, from the previous session, according to Korea Exchange. The index slid as low as 5,992.91 during the session — its steepest single-day point drop on record after the 910.71-point decline on June 23.

Nearly every sector posted losses. Semiconductors and semiconductor equipment led the decline, tumbling 13.91 percent, followed by electronic equipment and devices (-14.92 percent), electrical equipment (-11.96 percent), energy equipment and services (-11.14 percent), broadcasting and entertainment (-9.82 percent) and telecommunications equipment (-9.21 percent). Even traditionally defensive sectors failed to hold ground, with tobacco (-0.49 percent), diversified telecom services (-0.96 percent) and real estate (-1.03 percent) all finishing lower, underscoring how broadly the selling pressure spread.

Large-cap stocks were swept up in the rout. Samsung Electronics dropped 13.39 percent and SK hynix fell 14.65 percent, while Samsung Electro-Mechanics (-15.92 percent), SK Square (-15.60 percent) and Samsung Electronics preferred shares (-12.01 percent) all posted double-digit losses. Hyundai Motor (-9.68 percent), Samsung Life (-8.51 percent), LG Energy Solution (-5.71 percent) and KB Financial Group (-4.29 percent) also declined. Among the top 10 stocks by market capitalization, Samsung Biologics (+0.26 percent) was the sole gainer.

Foreign investors drove the selloff. They offloaded a net 4.97 trillion won ($3.39 billion) on the Kospi on Tuesday. Over the three most recent trading sessions — including Friday and Monday — their cumulative net selling reached 11.12 trillion won. Over the same period, retail investors absorbed most of the foreign supply, posting net purchases of 11.49 trillion won, but it was not enough to stem the decline.

Market analysts attributed the selloff to a confluence of factors that further eroded already fragile sentiment: a pullback in US semiconductor stocks, the upcoming listing of Chinese memory chipmaker CXMT, and news that China had developed deep ultraviolet lithography equipment. Caution ahead of earnings releases from SK hynix and major US technology companies amplified the selling, which spread from semiconductors across the broader market.

"The narrative around semiconductor stocks had already been damaged, and news about China's DUV lithography equipment further chilled investor sentiment," said Han Ji-young, a researcher at Kiwoom Securities. "Wariness ahead of earnings from SK hynix and the US Magnificent Seven also added to market volatility."

Some analysts, however, see the recent plunge as an oversold condition. "There were factors weighing on the market — China's lithography equipment, Middle East risk and interest rate hike discussions — but there were not many genuinely new negative catalysts," said Yang Hyeong-mo, a researcher at DS Investment Securities. "The Kospi appears to be entering a zone where a rebound from the bottom is increasingly likely."


kacew@heraldcorp.com