Kospi Index Plunges Over 4%: Triggers Temporary Trading Halt Mechanism, Halts Kospi Program Trading

TradingKey - South Korean stocks plunge again as the KOSPI index tumbles over 4%, triggering a temporary trading halt mechanism.

On July 20, following the opening of Asia-Pacific markets, the South Korean stock market staged another dramatic sell-off. During early trading, losses in the KOSPI index and futures prices instantly widened to over 4%, triggering panic selling and heavily concentrated selling pressure. The Korea Exchange was forced to activate its program trading halt mechanism (Sidecar), suspending program sell orders for both the KOSPI and the junior board KOSDAQ for 5 minutes.

As of press time, the KOSPI index narrowed its decline to 3.53%, trading at 6,580.09 points, once again approaching last Tuesday's low. Heavyweight stocks staged an intraday reversal to trade higher but have since declined again, with Samsung Electronics falling 3.24% to 246,500 Korean won, and SK Hynix dropping 2.66% to 1,793,000 Korean won.

KOSPI index chart, Source: TradingView

In early trading today, international oil prices surged over 3%, with Brent crude once again breaking above $91 per barrel. This comes as geopolitical conflicts in the Middle East worsened over the weekend, with the shadow of consecutive overnight U.S. airstrikes on Iran and Iran's closure of the Strait of Hormuz still lingering. This undoubtedly compounds the woes for South Korea's economy, which just announced a rate hike. Fears of imported inflation have severely damaged bull confidence, while South Korea's deleveraging effect has triggered a chain reaction of 'passive selling', exacerbating the market plunge.