Panic Selling Hits South Korea Stocks as KOSPI, Kosdaq Trigger Sequential Sell Sidecars

South Korean stocks tumbled on July 8, triggering sequential sell sidecars on the KOSPI and Kosdaq markets that temporarily halted program sell orders.

The Korea Exchange said at 1:31:58 p.m. a move in KOSPI 200 futures triggered a five-minute suspension of program sell orders on the KOSPI market. At the time, the KOSPI 200 futures index stood at 1,174.36, down 64.64 points, or 5.21%, from the previous close. A sell sidecar on the KOSPI market is triggered when KOSPI 200 futures fall at least 5% and remain there for one minute.

At 1:33:58 p.m., a sell sidecar was also triggered on the Kosdaq market. At that time, Kosdaq 150 futures were down 6.31% from the previous close at 1,372.60, while the Kosdaq 150 spot index had fallen 6.76% to 1,365.13.

A Kosdaq sell sidecar is triggered when Kosdaq 150 futures fall at least 6% from the reference price and the Kosdaq 150 index drops at least 3% from the previous trading day's closing level, with both conditions sustained for one minute. The back-to-back triggers in the two markets were aimed at containing a rapid spillover from the futures selloff into the broader cash market.

The slide appeared to reflect worsening investor sentiment as tensions between the US and Iran rose over the Strait of Hormuz. On July 7, after Iran attacked three ships passing through the strait in succession, US Central Command announced it had launched a strong airstrike against Iran in response.

Concerns about a peak in semiconductor stocks also weighed on sentiment. Morgan Stanley said investors were rotating into relatively underperforming sectors, including hyperscalers, weakening momentum in chip shares.

Although market safeguards were activated, investor anxiety showed little sign of easing. The five-minute halt in program trading does not fundamentally remove selling pressure, leaving late-session flows and trading by foreign and institutional investors as key variables for the market's direction.

Kang Kyung-ju, Hankyung.com reporter, qurasoha@hankyung.com