South Korean stocks suffered a severe blow on Thursday, with both the KOSPI and KOSDAQ plunging more than 8%, triggering circuit breakers on both markets in succession, prompting regulators to intervene urgently.
According to South Korean media outlet News1, the Financial Services Commission convened an emergency response meeting at 2:30 p.m. that afternoon, chaired by Chairman Lee Won-geon, to assess the sharp stock market decline and intensifying market volatility, and to discuss measures to stabilize the financial market. This marked the first time since July 29 that South Korea's two major stock indices triggered circuit breakers on the same day.
The direct trigger for the decline was the spread of concerns over returns on and financing conditions for the U.S. artificial intelligence industry into the South Korean market. The U.S. September Consumer Price Index (CPI) released overnight came in above market expectations, pushing U.S. Treasury yields higher, intensifying financing pressures on AI infrastructure companies, and markedly weakening investor sentiment.
As of press time, the KOSPI's decline had widened to 9%, standing at 5,465.03 points. Among individual stocks, SK Hynix extended its losses to more than 12%, hitting a new low since April 27. Samsung Electronics fell more than 11%.
Regulators Step In to Discuss Market Stabilization Measures
Faced with rapidly escalating market volatility, the Financial Services Commission swiftly activated its emergency response mechanism. The meeting will conduct a comprehensive review of the background behind the sharp stock decline and current market conditions, and will discuss measures to stabilize the financial market.
South Korea's financial regulatory authorities held an emergency meeting on the stock market and issued an official statement, calling for proactive measures to safeguard market stability and protect investors.
The statement urged financial institutions to avoid excessive credit extension and to carry out investor protection and risk management duties properly; it also said authorities will deal harshly with acts that disrupt the market and are prepared to activate contingency plans if necessary.
Authorities and market experts said that against the backdrop of expectations for rising global interest rates, uncertainty over AI semiconductor investment and profitability, and rising oil prices, the stock market may have overreacted in terms of the speed of the decline and investor fund flows. Authorities will take stern measures against market-disrupting behavior, including false rumors, market manipulation, and illegal short selling.
According to Korea Exchange data, the KOSDAQ market was the first to trigger a Level 1 circuit breaker at 12:23 p.m. that day, and the KOSPI index subsequently fell 8% from the previous trading day to 5,528.05 points at 12:38 p.m., halting securities market trading for 20 minutes. Previously, the program selling "sidecar" mechanisms on both markets had been activated in succession, but selling pressure did not ease as a result, ultimately leading to the circuit breaker trigger.
This was the first time since July 29 that the KOSPI and KOSDAQ both triggered circuit breakers on the same trading day, highlighting the fragility of current market sentiment. The high-level emergency response by regulators this time indicates that authorities are closely monitoring the potential impact of market volatility on financial stability.
Foreign investors were the main driver of this round of decline. Foreign investors net sold 2.9013 trillion won in the KOSPI market that day, maintaining a net selling stance for the eighth consecutive trading day. At the same time, retail investors and institutional investors net bought 1.2170 trillion won and 1.2701 trillion won, respectively, partially absorbing the selling pressure from foreign investors.
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