Kospi tumbles over 5% as Samsung Electronics, SK hynix plunge; sell-side sidecar triggered

The Kospi plunged more than 5% in early trading Tuesday, sliding to the 6,050 level as Samsung Electronics and SK hynix tumbled more than 5% and 7%, respectively, while foreign investors net sold over 1 trillion won ($749 million), driving the index lower. A sell-side sidecar — a temporary suspension of 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 6,057.55 as of 9:55 a.m., down 326.69 points, or 5.12%, from the previous session. The index opened down 198.16 points, or 3.10%, at 6,186.08 before extending its losses.

Korea Exchange activated 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%, from the base price of 1,006.22. With the futures price having fallen more than 5% for at least 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. For a sell-side sidecar specifically, it was the first activation in about two months since Aug. 19.

Foreign investors net sold 1.06 trillion won on the main bourse. Retail and institutional investors, meanwhile, net bought 666.2 billion won and 300 billion won, respectively.

Among large-cap stocks, Samsung Electronics and SK hynix posted the steepest declines. Samsung Electronics was trading at 236,000 won, down 14,500 won, or 5.79%, from the previous session. SK hynix fell 122,000 won, or 7.60%, to 1.48 million won.

Other top-cap stocks also fell broadly: SK Square (-9.45%), Samsung Electro-Mechanics (-6.79%), Hyundai Motor (-5.78%), Samsung Electronics preferred shares (-5.03%), Samsung Life Insurance (-4.67%), LG Energy Solution (-2.26%), Samsung Biologics (-1.42%) and KB Financial Group (-1.35%).

On the Kospi, 794 stocks were declining, while 103 were advancing and 15 were unchanged.

The overnight weakness in US semiconductor stocks weighed on domestic chipmakers. On Monday (local time), the Dow Jones Industrial Average rose 0.38% on Wall Street, but the S&P 500 and the Nasdaq Composite fell 0.06% and 0.44%, respectively. Among chipmakers, Micron dropped 3.88% and SanDisk fell 5.97%.

Sentiment was further weighed down after Chinese memory chipmaker CXMT unveiled plans to launch next-generation DDR5 server memory products, stoking concerns about a future expansion in memory chip supply and intensifying competition. The expiration of Samsung Electronics' buyback program, combined with continued foreign net selling, has also weakened the supply-demand foundation of the domestic market.

The Kosdaq also fell in tandem. At the same time, the index was down 28.55 points, or 3.36%, at 820.64. It opened lower by 25.50 points, or 3.00%, at 823.69.

On the Kosdaq, retail investors net sold 91.2 billion won. Foreign and institutional investors net bought 88 billion won and 7.1 billion won, respectively.

Top-cap Kosdaq stocks were also broadly lower: Ecopro BM (-7.44%), Rainbow Robotics (-6.14%), Simtech (-5.75%), EO Technics (-4.99%), Ecopro (-4.64%), Wonik IPS (-4.58%), Jusung Engineering (-4.55%), HLB (-4.28%), Alteogen (-4.32%) and Leeno Industrial (-1.92%). Declining stocks numbered 1,427, with 52 unchanged and 250 advancing. Six stocks hit the upper limit.

Market analysts note that 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 — currently around the 6,376 level. The release of the US September consumer price index and earnings results from major chipmakers including ASML and TSMC are seen as key variables that could determine whether the market recovers.

"The domestic 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, a researcher 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."