KOSPI Surges Nearly 5% Past 5,700, Triggering Sidecar Mechanism to Suspend Buying for 5 Minutes

TradingKey - KOSPI Index surges nearly 5%, extreme buying fever prompts Korea Exchange to urgently trigger Sidecar mechanism to suspend program buying.

In early trading on October 27, the South Korean stock market staged an extremely rare V-shaped rebound after experiencing severe volatility and deleveraging shakeouts last week. The South Korean benchmark index, KOSPI, surged over 4% in early trading, forcefully breaking through the 5,700-point mark. Currently, KOSPI's gains have expanded to nearly 5%, reaching 5,736.65 points.

KOSPI Index chart, source: TradingView

As an instantaneous influx of program buying caused severe volatility in the futures market, the Korea Exchange officially activated the buy-side Sidecar protection mechanism in the morning, urgently suspending the execution of KOSPI program buy orders for 5 minutes to cool down market overheating.

This activation of the buy-side suspension mechanism indicates that global institutional investors and quantitative funds are covering short positions and actively rebuilding positions in Korean heavyweight stocks with high leverage efficiency and speed. The driving forces behind this are the recovery of global risk appetite ahead of the US stock market's "tech earnings week," the positive impact of heavyweight stock SK Hynix's 16 trillion won special dividend, as well as the Korean won halting its slide and selling pressure reaching exhaustion.