Kospi halts trading for 10th time this year as markets plunge more than 8%

South Korea's stock markets were rocked Thursday as both the Kospi and Kosdaq plunged more than 8 percent, triggering back-to-back circuit breakers that halted trading. It was the 10th time this year a circuit breaker has been activated on the Kospi and the fifth on the Kosdaq.

According to Korea Exchange, a circuit breaker was triggered on the Kosdaq at 12:23 p.m., suspending all trading for 20 minutes.

At the time of the halt, the Kosdaq stood at 757.88, down 66.00 points, or 8.01 percent, from the previous session.

Fifteen minutes later, a circuit breaker was also triggered on the Kospi. The index was at 5,528.05, down 480.76 points, or 8.00 percent, from Wednesday.

Korea Exchange activates a Level 1 circuit breaker when either the Kospi or Kosdaq falls more than 8 percent from the previous day's close for at least one continuous minute.

Once triggered, all trading is suspended for 20 minutes and order submissions — except cancellations — are also halted. After trading resumes, a single-price auction runs for an additional 10 minutes.

The last time Level 1 circuit breakers were triggered on both markets on the same day was July 29, roughly two and a half months ago.

Thursday marked the 10th circuit breaker activation on the Kospi this year and the fifth on the Kosdaq. Across their entire histories, circuit breakers have been triggered only 16 times on the Kospi and 15 times on the Kosdaq.

Earlier in the session, sell-side sidecars were also activated on both markets in succession. It was the 51st sidecar activation on the Kospi this year and the 33rd on the Kosdaq.

Analysts said the extreme swings reflect volatility that has peaked, with markets lurching between sharp drops and sharp rebounds.

The Kospi ended last year at 4,214.17 before surging to an all-time closing high of 9,114.55 on June 22, only to retreat to the 5,500 level — a decline of nearly 40 percent from the peak.

As of 1:17 p.m. Thursday, the Kospi was trading at 5,530.23, down 7.96 percent from the previous session.

Samsung Electronics fell 9.91 percent to 209,000 won ($156), while SK hynix dropped 11.28 percent to 1.26 million won.

Most other large-cap stocks were also in the red, including SK Square (down 10.09 percent), LG Energy Solution (down 4.74 percent), Samsung Electro-Mechanics (down 16.52 percent) and Hyundai Motor (down 6.22 percent). Samsung Biologics was a rare exception, rising 4.48 percent to 1.24 million won.

Analysts attributed the Kospi's recent weakness largely to a shortage of fresh capital to drive the index higher.

"Liquidity in the Korean stock market is more depleted now than it was in the first half of the year," said Kim Dae-jun, a researcher at Korea Investment Securities. "Under these conditions, it will be difficult to expect a sharp recovery in large-cap stocks."

Foreign investors have net sold more than 205 trillion won worth of Kospi-listed shares so far this year. Retail investors who bought near the peak are sitting on mounting losses, dampening sentiment further. Adding to the pressure, the buyback programs at Samsung Electronics and SK hynix — which had helped prop up the index — have now concluded, widening the supply-demand gap.

Intensifying competition in the semiconductor sector, which has long underpinned the domestic market, is another headwind. Advances by China's CXMT in next-generation DRAM technology are stoking concern about future supply expansion and the durability of current profit margins.

"Elevated volatility is expected to persist for now," said Kim Sung-geun, a researcher at Mirae Asset Securities. "With supply-demand conditions deteriorating and the external environment unlikely to improve in the near term, investors need to closely monitor the macroeconomic backdrop and any changes in corporate earnings."

Kim added that sentiment toward domestic semiconductor stocks is freezing up as potential rivals emerge. "However, it is important to distinguish between a technology announcement, customer validation and stable mass production," he said. "At this point, what is being priced in is not so much an immediate hit to earnings as growing doubt over how long the high profitability can be sustained."