Kospi retreats below 7,300, Kosdaq breaks 800 as panic selling triggers dual sidecar halts

The Kospi fell back toward the 7,200 level while the Kosdaq broke below 800 during trading for the first time in about 10 months, as panic selling swept both markets Wednesday. The Kospi briefly turned positive intraday before reversing sharply, with both indexes losing more than 5 percent. Korea Exchange activated sell-side program trading halts — known as sidecars — on both markets in quick succession.

Market analysts said the selloff was driven more by deteriorating investor sentiment and supply-demand imbalances than by corporate earnings or fundamentals, with the rout deepening as key technical trend lines were breached.

As of 1:45 p.m., the Kospi was trading at 7,255.20, down 401.11 points, or 5.24 percent, from the previous session, according to Korea Exchange. The index opened down 203.83 points, or 2.66 percent, at 7,452.48 and at one point climbed nearly 2 percent during the morning before reversing course around 10:31 a.m. and accelerating its decline.

Korea Exchange activated a sell-side sidecar on the Kospi market at 1:31 p.m. after the front-month KOSPI 200 futures contract fell 5.21 percent below its reference price for one continuous minute, meeting the trigger threshold. Program trading sell orders were suspended for five minutes following the activation. It was the 17th sell-side sidecar on the Kospi this year.

On the main board, foreign investors and retail investors were net sellers of 526 billion won ($345 million) and 195 billion won, respectively. Institutional investors were net buyers of 703.2 billion won.

Samsung Electronics was trading down 19,500 won, or 6.59 percent, at 276,500 won, while SK hynix fell 79,000 won, or 3.59 percent, to 2.12 million won.

Other large-cap stocks were also broadly lower, with SK Square down 8.55 percent, Samsung Electronics preferred shares off 6.82 percent, Samsung Electro-Mechanics down 8.25 percent, Hyundai Motor falling 4.90 percent, LG Energy Solution losing 5.57 percent, Samsung Life declining 8.93 percent and Samsung C&T dropping 8.36 percent.

The Kosdaq was trading at 782.22 at the same time, down 49.01 points, or 5.90 percent, from the previous session. The index opened down 14.84 points, or 1.79 percent, at 816.39 before extending its losses. The last time the Kosdaq fell below 800 intraday was Sept. 4 last year, about 10 months ago.

Korea Exchange also activated a sell-side sidecar on the Kosdaq market at 1:33 p.m. The halt was triggered after the front-month Kosdaq 150 futures contract fell 6.31 percent and the Kosdaq 150 index dropped 6.76 percent from the previous session for one continuous minute. Program trading sell orders were suspended for five minutes. It was the seventh sell-side sidecar on the Kosdaq this year.

On the Kosdaq, foreign investors and retail investors were net buyers of 26.5 billion won and 6.4 billion won, respectively, while institutional investors were net sellers of 32.2 billion won.

Among top Kosdaq-listed stocks by market capitalization, Alteogen fell 8.15 percent, Ecopro BM dropped 5.19 percent, Ecopro lost 6.87 percent, Rainbow Robotics declined 8.38 percent, Jusung Engineering fell 8.03 percent, Kolon TissueGene dropped 9.00 percent, HLB slid 3.77 percent and Leeno Industrial fell 3.06 percent.

Han Ji-young, a researcher at Kiwoom Securities, said the sharp declines of more than 5 percent on both the Kospi and Kosdaq reflected the outsized influence of investor sentiment and supply-demand dynamics rather than corporate earnings or fundamentals. Han said the aftershock of Samsung Electronics' share price plunging despite its earnings surprise the previous day continued to reverberate, adding that concerns over slowing memory chip price growth and supply-demand distortions tied to single-stock leveraged ETFs were dampening sentiment toward semiconductor investments.

Han added that technical pressure had also mounted as the Kospi broke below its 60-day moving average — a medium-term trend line — while the Kosdaq fell through its 200-day moving average, a long-term indicator. "With investor fatigue building from consecutive corrections, a pattern has emerged where stocks are sold into any rebound and dumped further on declines," Han said. "Sentiment and supply-demand conditions are together producing share price drops that are not rationally justified."