Kospi falls more than 6% intraday, breaking below 6,000; sell-side sidecar triggered

Foreign investors net sell nearly 2 trillion won; Kosdaq also drops more than 4%

Sentiment hit as China's CXMT unveils next-generation memory chip plans

The trading board at Hana Bank's headquarters in Jung-gu, Seoul, displays the Kospi and international oil prices Tuesday. The Kospi fell more than 5 percent in early trading, extending its losing streak to five consecutive sessions. [Yonhap]
The trading board at Hana Bank's headquarters in Jung-gu, Seoul, displays the Kospi and international oil prices Tuesday. The Kospi fell more than 5 percent in early trading, extending its losing streak to five consecutive sessions. [Yonhap]

The Kospi plunged more than 6 percent during trading Tuesday, falling below the 6,000 mark. Samsung Electronics and SK hynix dropped more than 6 percent and 8 percent, respectively, while foreign investors led the decline with net selling exceeding 1.8 trillion won ($1.35 billion). A sell-side sidecar — a temporary halt on program sell orders — was triggered on the main bourse for the first time in about two months after KOSPI 200 futures prices fell sharply.

According to Korea Exchange, the Kospi was trading at 5,995.67 as of 10:36 a.m., down 388.57 points, or 6.09 percent, from the previous session. The index opened 198.16 points, or 3.10 percent, lower at 6,186.08 before sliding as far as 5,988.22 intraday. It briefly recovered the 6,000 level before dipping back below it, hovering around that threshold.

Korea Exchange triggered the sell-side sidecar on the main bourse at 9:47:58 a.m. At that point, the KOSPI 200 futures price stood at 955.02, down 51.20 points, or 5.08 percent, from the base price of 1,006.22. With the KOSPI 200 futures price having fallen more than 5 percent for more than one minute, program sell orders were suspended for five minutes.

It was the first time a sidecar had been triggered on the Kospi market since Aug. 20. As a sell-side sidecar specifically, it was the first activation in about two months since Aug. 19.

Foreign investors net sold 1.86 trillion won on the main bourse, while retail investors and institutions net bought 1.07 trillion won and 613.7 billion won, respectively.

Among large-cap stocks, Samsung Electronics and SK hynix posted the steepest declines. Samsung Electronics was trading at 233,500 won, down 17,000 won, or 6.79 percent, from the previous session. SK hynix fell 137,000 won, or 8.54 percent, to 1.47 million won.

Other large-cap stocks were broadly lower: SK Square (-11.99 percent), Samsung Electro-Mechanics (-8.81 percent), Samsung SDI (-7.84 percent), Samsung C&T (-6.68 percent), Samsung Life Insurance (-5.98 percent), Samsung Electronics preferred shares (-5.89 percent), Hyundai Motor (-5.78 percent), Hanwha Aerospace (-4.99 percent), LG Energy Solution (-3.77 percent), KB Financial Group (-2.40 percent) and Samsung Biologics (-1.42 percent).

As of 10:36 a.m., 837 stocks were declining on the Kospi market, with 64 advancing and 13 unchanged.

The sharp drop in domestic semiconductor stocks was attributed in part to weakness in US chip shares overnight. On Monday (local time), the Dow Jones Industrial Average rose 0.38 percent on Wall Street, but the S&P 500 and the Nasdaq Composite fell 0.06 percent and 0.44 percent, respectively. Among semiconductor stocks, Micron dropped 3.88 percent and SanDisk fell 5.97 percent.

Sentiment was also weighed down by CXMT, a Chinese memory chipmaker, after it unveiled plans to release a next-generation DDR5 product for servers, stoking concerns about a future expansion of memory chip supply and intensifying competition. CXMT, however, has yet to achieve mass production, and its yield, performance and customer certification remain unverified.

Persistent foreign net selling in recent weeks, combined with the end of Samsung Electronics' share buyback program, has also weakened the supply-demand foundation of the domestic stock market.

The Kosdaq also fell sharply, dropping more than 4 percent. As of 10:36 a.m., the Kosdaq was down 35.83 points, or 4.22 percent, at 813.36. The index opened 25.50 points, or 3.00 percent, lower at 823.69 before sliding as far as 810.96 intraday.

On the Kosdaq, retail investors net sold 128.2 billion won, while foreign investors and institutions net bought 102.7 billion won and 28.9 billion won, respectively.

Large-cap Kosdaq stocks were also broadly lower: Ecopro BM (-8.39 percent), Simtech (-7.81 percent), ISC (-6.16 percent), Ecopro (-5.71 percent), Samsung SDI (-5.88 percent), Rainbow Robotics (-5.63 percent), Alteogen (-5.40 percent), EO Technics (-5.38 percent), Wonik IPS (-4.51 percent), Jusung Engineering (-2.96 percent), HLB (-2.70 percent) and Leeno Industrial (-2.18 percent). PSK was the exception, rising 0.99 percent.

As of 10:36 a.m., declining stocks on the Kosdaq numbered 1,514, far outnumbering the 165 advancers. There were 51 unchanged issues and five stocks hitting the daily upper limit.

Market analysts said investor sentiment has deteriorated further as the Kospi fell below its 200-day moving average — widely watched as a gauge of medium- to long-term trend — at around 6,376. Upcoming releases of the US September consumer price index and earnings from major chipmakers including ASML and TSMC are seen as key variables in determining whether the market can recover.

"The domestic stock market's supply-demand foundation has weakened as retail investor sentiment has softened, Samsung Electronics' buyback has ended and foreign net selling has continued," said Han Ji-young, an analyst at Kiwoom Securities. "Macro and earnings uncertainty has dampened buying demand among market participants, and with the buyback — which had served as a supply-demand buffer — now winding down, the market's ability to absorb selling pressure has diminished."


hajun825@heraldcorp.com