Circuit breakers triggered for second straight day; Kospi halts reach 9 this year alone

Circuit breakers were triggered in both the Kospi and Kosdaq markets for a second consecutive day on Wednesday — the first time in history that both markets have simultaneously activated the mechanism on back-to-back trading days.

According to Korea Exchange, the Kosdaq circuit breaker was triggered at 12:19:12 p.m., followed by the Kospi at 12:32:32 p.m.

The activations marked the 15th circuit breaker in the Kospi market and the 14th in the Kosdaq market since the mechanism was introduced in December 1998.

On Tuesday, the Kospi and Kosdaq indexes had each plunged more than 11 percent and 8 percent, respectively, during trading, also triggering circuit breakers in both markets.

A circuit breaker is a market stabilization mechanism that activates when the composite stock index falls 8 percent or more from the previous day's closing price and remains at that level for at least one minute. Once a Level 1 circuit breaker is triggered, all trading is suspended for 20 minutes. After trading resumes, a single-price auction is held for an additional 10 minutes.

Market volatility has risen sharply this year, driving a significant increase in circuit breaker activations. The Kospi market has triggered the mechanism nine times this year alone — accounting for 60 percent of all Kospi circuit breaker activations in history.

Kospi circuit breakers have historically been tied to major shocks in global financial markets: the US stock market crash and oil price surge in 2000, the Sept. 11 terrorist attacks in 2001, and the COVID-19 pandemic in 2020. Analysts say the repeated activations within such a short period this year are highly unusual.

The Kosdaq market has seen four circuit breaker activations so far this year.

Sidecar activations have also become more frequent. Sell-side sidecars were triggered in both the Kospi and Kosdaq markets on Wednesday.

The total number of sidecar activations in the Kospi market this year has now reached 43 — 23 sell-side and 20 buy-side. This month, sidecars have been triggered on 14 of 20 trading days.

As of 3:13 p.m. Wednesday, the Kospi stood at 5,552.02, down 7.83 percent from the previous session, while the Kosdaq fell 7.02 percent to 656.31.