South Korea's financial authorities are scheduled to convene an emergency market meeting today to address the recent turmoil in the stock market. The move comes after the Kospi benchmark index plummeted significantly, marking its steepest two-day decline since the 2008 global financial crisis. On Wednesday, the Kospi dropped 12% following a 7.2% decline on Tuesday, leading to a total plunge of 10.84% on July 28, closing at 6023.66. During the session, the index briefly dipped below 6000, sliding as low as 5990.
The sharp downturn in the Kospi was largely attributed to aggressive selling by foreign investors, particularly impacting major semiconductor companies like Samsung Electronics Co. and SK Hynix Inc., which saw their stock prices tumble. The market rout triggered a 20-minute trading halt early in Wednesday's session, and a circuit breaker was activated at 10:13 AM on the securities market by the Korea Exchange, marking the 8th such activation this year for the Kospi. Additionally, a sidecar (selling-side trading halt) was triggered at 9:06 AM, the 42nd overall and 22nd for selling this year.
The broader market reflected the panic, with only 10 out of over 800 stocks on the benchmark finishing in positive territory on Wednesday. A key volatility gauge surged to its highest level since 2008, underscoring the severity of the market's reaction to what has been described as a "black Tuesday" for the Kospi. Prior to this, the Kospi had climbed around 80% this year to record highs, with analyst earnings upgrades surpassing this growth, driving the benchmark to trade at just 6.4 times forward earnings, which is below 2008 levels [bloomberg.com].
