Kospi plunges as KRX halts program selling on both markets

South Korea's Kospi fell more than 6% in early trading on Thursday, Oct. 15, after it opened 5.59% lower at 5,673.01, down 335.8 points from the previous close, according to Korea JoongAng Daily. The drop triggered a sell-side sidecar, which pauses program trading for five minutes. Within minutes the index had fallen below 5,600. Two worries drove the selling: higher-than-expected US inflation and doubts about whether heavy spending on AI will pay off.en.yna.co.kr

Curbs Hit Both Markets

The Korea Exchange activated the Kospi sidecar at 9:07 a.m., after Kospi 200 futures fell 5.27%, KBS World reported. A sidecar kicks in when those futures move 5% or more for at least one minute, Yonhap noted. A second sidecar followed on the tech-heavy Kosdaq at 9:12 a.m., after Kosdaq 150 futures dropped more than 6%. It was the first time both markets triggered sell-side sidecars on the same day in 51 trading days, according to MoneyToday.en.yna.co.kr+2

Although some headlines described these as circuit breakers, they were sidecars. Sidecars only pause program trading, while a full circuit breaker halts all trading.

Both indexes fell more than 6% in early trading, The Herald Business reported. The V-Kospi volatility gauge rose above 50 for the first time since late August. Chip stocks led the decline. Samsung Electronics fell more than 7%, SK hynix ↘ 6.06% dropped about 9%, and SK Square and Samsung Electro-Mechanics also slid, the outlet said. KED Global reported that foreign investors were selling the big chipmakers.kedglobal.com+1

Inflation and AI Doubts

The selloff followed losses on Wall Street. Overnight, the S&P 500 fell 1.11% and the Nasdaq Composite dropped 1.88%. US consumer prices rose 3.7% from a year earlier in September, above the 3.6% economists expected, according to Korea JoongAng Daily. AI cloud company CoreWeave ↘ 15.46% fell 15.46% and Oracle ↘ 8.83% lost 8.8% amid concerns about debt and whether data center spending will be recovered, The Herald Business reported.biz.heraldcorp.com+1

The Kospi had already fallen for six straight sessions before Thursday. On Oct. 14 it closed down 0.4% at 6,008.81 after giving up an early rally, KED Global reported. A sell-side sidecar was also triggered on Tuesday, Oct. 13, when the Kospi fell more than 7% during the day, according to KBS World.world.kbs.co.kr+1

Analysts See Possible Bottom

Han Ji-young of Kiwoom Securities said the market was hit by "the combined impact of macro burdens such as the U.S. September CPI and the sharp declines in U.S. AI infrastructure stocks." She added that after seven days of steep losses, "technical buying could flow in and narrow the losses," according to Nocut News. She named upcoming earnings from TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 3.40% and Anthropic as factors to watch.en.nocutnews.co.kr

Yang Hyeong-mo of DS Investment Securities was more hopeful. "We are in the final stretch of pain, and once the uncertainty lifts, the discounted earnings will be priced back in," The Herald Business quoted him as saying.biz.heraldcorp.com