Foreign sell-off in Samsung Electronics, SK hynix drags KOSPI down 10%
Profit-taking, rather than macroeconomic factors, leads to share offloading
The dollar-won exchange rate, KOSPI and Kosdaq indexes are displayed on a screen at the dealing room of Hana Bank in Seoul, Tuesday. The KOSPI closed at 8,203.84, down 910.71 points, or 9.99 percent, from the previous session, while the Kosdaq ended at 891.52, losing 76.88 points, or 7.94 percent. Yonhap
Korean stocks suffered a steep decline Tuesday as foreign investors offloaded shares across the board, dragging the benchmark KOSPI down by nearly 10 percent and triggering market stabilization measures.
The KOSPI, which closed at a record high of 9,114.55 in the previous session, opened at 9,083.54, down 31.01 points, or 0.34 percent. After briefly moving into positive territory, the index reversed course and extended its losses throughout the session, finishing at 8,203.84, down 910.71 points, or 9.99 percent.
The sell-off hit heavyweight chipmakers particularly hard, with Samsung Electronics and SK hynix, the market's two largest stocks, sliding 12.31 percent and 12.47 percent, respectively.
As the downturn intensified, the Korea Exchange activated a circuit breaker on the main board at around 2:33 p.m., halting trading for 20 minutes. The measure was triggered after the KOSPI remained more than 8 percent below the previous day's closing level for at least one minute.
Earlier, a sell-side sidecar was already imposed at around 11:40 a.m. following sharp declines in KOSPI 200 futures, temporarily suspending program sell orders for five minutes.
Foreign investors were heavy net sellers, offloading a net 5.79 trillion won ($3.8 billion) worth of shares on the benchmark market, according to combined data from the Korea Exchange and Nextrade. Retail investors, meanwhile, bought a net 11.11 trillion won worth of stocks, setting a new record for daily net purchases.
The sharp retreat came after losses in major technology stocks on Wall Street overnight and renewed concerns about further U.S. interest rate hikes.
Han Ji-young, an analyst at Kiwoom Securities, said the market slump appeared to stem largely from profit-taking in semiconductor stocks rather than a broad deterioration in macroeconomic conditions.
"Key indicators such as oil prices, the U.S. 10-year Treasury yield and the dollar have shown little change, making it difficult to attribute today's sell-off to macroeconomic factors," Han said.
"Instead, the decline appears to reflect a short-term correction following the heavy concentration of investor funds in semiconductor shares," the analyst added, noting that intensified profit-taking by foreign investors in chip stocks had amplified volatility and accelerated losses in the broader market.
The tech-heavy Kosdaq also moved sharply lower. After opening at 958.64, down 9.76 points, or 1.01 percent, from the previous session, the index extended its losses and closed at 891.52, down 76.88 points, or 7.94 percent.
A sell-side sidecar was triggered on the junior bourse at around 11:37 a.m., suspending program sell orders for five minutes.
In Seoul's foreign exchange market, the Korean won weakened against the U.S. dollar, opening at 1,539.4 won per dollar, down 2.4 won from the previous session. The currency closed onshore trading at 1,539.1 won, down 2.1 won.