The KOSPI index opened sharply lower, dropping more than 5% due to a surge in U.S. long-term Treasury yields and weakness in semiconductor stocks. Following significant declines in semiconductor shares like Micron and SanDisk on Wall Street, foreign and institutional selling pressure pushed the index down to the 6,400 level. The early drop triggered a sell-side circuit breaker in the securities market.
As of 9:23 a.m. on August 19, the KOSPI was trading at 6,436.59, down 433.24 points (6.31%) from the previous trading day. The index started at 6,528.77, down 341.06 points (4.96%), and continued to widen its losses.
At 9:06:02 a.m., a sell-side circuit breaker was activated, temporarily halting the effectiveness of program sell orders in the securities market. The KOSPI 200 futures, based on the index, fell 6.02% to 1,013.26 from the previous day's closing price of 1,078.26. Consequently, the effectiveness of program sell orders was suspended for five minutes from the activation time.
This sell-side circuit breaker marked the 25th activation in the securities market this year. Including 23 buy-side circuit breakers, the total number of activations in the securities market this year reached 48.
U.S. markets also fell sharply overnight due to rising long-term Treasury yields and uncertainties in the Middle East. On August 18, the Dow Jones Industrial Average dropped 0.20%, the S&P 500 fell 0.70%, and the tech-heavy Nasdaq declined by 1.30%.
Investor sentiment was dampened as expectations for a ceasefire negotiation between the U.S. and Iran faded, with the yield on 30-year U.S. Treasury bonds surpassing 5.33%, the highest level since 2007. The yield on 10-year bonds also rose to 4.70%.
Recently strong semiconductor stocks faced profit-taking, with Micron down 6.9% and SanDisk plunging 9.0%. Nvidia also fell by 2.3%. In the domestic market, selling pressure on major semiconductor stocks contributed to the index's decline.
At this time, foreign and institutional investors were net sellers of 1.2135 trillion won and 480.5 billion won, respectively. In contrast, individual investors were net buyers, purchasing 1.7159 trillion won as they sought bargain opportunities.
Among the top market capitalization stocks, Samsung Electronics (-7.36%), SK Hynix (-9.27%), SK Square (-11.63%), Samsung Electro-Mechanics (-4.38%), Hyundai Motor (-5.98%), LG Energy Solution (-1.99%), Samsung Biologics (-2.29%), KB Financial (-4.75%), and Samsung Life Insurance (-10.71%) all experienced declines. However, Hanwha Aerospace rose by 3.66%.
At the same time, the KOSDAQ index recorded a decline of 17.97 points (2.15%), trading at 816.23. The index opened at 810.08, down 24.12 points (2.89%), before slightly reducing its losses.
In the KOSDAQ market, foreign investors were net buyers of 75.9 billion won, while individuals and institutions sold 24.5 billion won and 47.9 billion won, respectively.
Among the top KOSDAQ stocks, most were in the red, including Alteogen (-1.17%), EcoPro (-2.76%), EcoPro BM (-2.84%), Rainbow Robotics (-3.19%), JUSUNG Engineering (-4.24%), HLB (-3.59%), Wonik IPS (-3.91%), Rino Technology (-5.31%), and ABL Bio (-0.63%).
Han Ji-young, a researcher at Kiwoom Securities, stated, "With the retreat of expectations for U.S.-Iran ceasefire negotiations and the surge in U.S. 30-year Treasury yields, there is pressure for profit-taking on semiconductor stocks that have recently rallied. The KOSPI 200 futures' sharp decline will also lead to a lower opening for the domestic market."
However, she added, "The pressure from rising interest rates has already been largely factored in through the previous day's drop, so there is a possibility of a recovery during the trading session. Compared to the sharp decline in July, the proportion of leveraged trading volume and volatility indicators for individual stocks has significantly decreased, reducing the likelihood of a repeat of the abnormal supply-demand deterioration and market crash seen at that time."
* This article has been translated by AI.
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