Massive sell-off in S. Korea stock market; sidecar triggered by KOSPI 200 futures index

Major U.S. tariffs are sending shock waves across global stock markets.

Today, Korean stocks were in freefall, down over 5-percent.

Trading had to be halted in the morning to ward off panic selling.

Lee Soo-jin reports.

U.S. President Donald Trump's tariff announcements have triggered massive sell-offs across South Korea's stock market.

The Korea Exchange at 9:12 AM on Monday, activated a sell-side sidecar for the first time in eight months, when the KOSPI 200 futures index fell 5-point-19 percent to 312-point-05.

A sidecar is triggered when the KOSPI 200 futures index rises or falls by 5 percent or more and stays there for at least one minute.

On Monday, the sidecar was activated for five minutes.

And stock indexes also took a hit amid mounting investor concerns over the impact of U.S. tariffs.

Both the benchmark KOSPI and the tech-heavy KOSDAQ closed down more than five percent, the KOSPI down 5-point-57 percent to around 2-thousand-3-hundred-28, and the KOSDAQ 5-point-25 percent to 6-hundred-51.

But one expert said decline of this size is likely a temporary phenomenon, which is why a circuit breaker --triggered when the KOSPI and KOSDAQ indexes fall by 8 percent or more --is unlikely to be activated.

"Today's market decline was likely driven by last Friday's slump in the U.S. market and President Trump's hardline stance over the weekend, which led to a 3 to 4 percent drop in U.S. futures that triggered foreign investor sell-offs. As such, the downturn is unlikely to continue for long."

The loss was led by foreign investors offloading shares as they reacted to sharp losses in U.S. markets.

On Friday local time, Wall Street suffered sharp losses, with the broad-based S&P 500 closing down 6 percent, the tech-heavy Nasdaq 5-point-8 percent.

And the Dow Jones fell around 5-point-5 percent.

This marked the second straight day of major losses, with the S&P and Dow Jones both suffering the biggest one-day drops since June 2020 on Thursday.

In the foreign exchange market on Monday, the Korean won weakened against the dollar, closing at around 1-thousand-467, down 33-point-7 won from the previous session after briefly topping 1-thousand-470 during intraday trading.

The same expert said this reflects fears of a potential global economic downturn, noting that Korea's exchange rate with the dollar has surpassed the 1-thousand-400 won mark three times in the past,

during the 1997 IMF crisis, the 2008 financial crisis, and the U.S. Fed's aggressive rate hikes in 2022.

Lee Soo-jin, Arirang News.