KOSPI Plunges 5%, Sell-Side Circuit Breaker Activated

The South Korean stock market reversed course dramatically on March 26, with the KOSPI index plummeting over 5% and activating a sell-side circuit breaker. This sharp decline came just a day after the market had surged, largely due to positive earnings from U.S. semiconductor firm Micron Technology.

The KOSPI opened lower and rapidly widened its losses, trading at 8469.90 by late morning, down 5.16% from the previous day. The KOSPI 200 futures index also fell more than 5%, prompting the 5-minute trading halt. The sell-off impacted most of the top market capitalization stocks, with Samsung Electronics dropping 6.42% and SK Hynix falling 7.16%. SK Square, SK Hynix's largest shareholder, plunged 9.58%.

Analysts attribute the downturn to massive selling by foreign investors, who offloaded approximately 2.5 trillion won worth of stocks. Despite individual investors buying heavily, their efforts were insufficient to stem the decline. This contrasts sharply with the U.S. market's previous day performance, where semiconductor stocks rallied on favorable earnings reports.

Market watchers suggest the domestic market's weakness is also influenced by profit-taking after the previous day's gains and portfolio rebalancing activities at the end of the quarter. The KOSDAQ index also saw a significant drop, falling 2.32%. Meanwhile, the Korean won weakened against the U.S. dollar, with the exchange rate rising to over 1547.3 won per dollar.