"Why isn't the rescue team coming?" KOSPI collapses below 5700... Kim Yong-beom: "It's not just leverage"

On the 29th, both the KOSPI and KOSDAQ indices plummeted simultaneously, triggering sell-side sidecar mechanisms (temporary suspension of program sell orders) in both major markets. Despite SK Hynix reporting record quarterly profits, its stock price fell by more than 9%. Concerns over Chinese memory semiconductor manufacturers' catch-up efforts and doubts about the profitability of artificial intelligence (AI) investments widened market volatility. Kim Yong-beom, Jeong Chaek (Head) of Cheong Wa Dae, announced plans to review the overall stock market situation that day, drawing attention to potential stability measures by financial authorities.

As of 11:28 a.m., the KOSPI index stood at 5751.64, down 272.02 points (4.52%) from the previous day. Although it initially rose and reached as high as 6228.52 (+204.86 points, +3.40%), it later reversed course and fell to a low of 5637.85 (-385.81 points, -6.40%). The intraday trading range was 590.67 points. The low of 5637.85 marks the lowest level since April 7 (5424.46). While individuals sold net 1.5127 trillion won worth of stocks, foreign investors and institutional investors bought net 27.8 billion won and 1.4785 trillion won, respectively.

The Korea Exchange activated the sell-side sidecar mechanism (temporary suspension of program sell orders) in the KOSPI market at 10:55:07 a.m. The KOSPI 200 futures price had fallen 5.15% below its reference level for over one minute, leading to a five-minute suspension of program sell order effectiveness. At 10:56:07 a.m., both the KOSDAQ150 futures and spot index met the threshold, triggering the same mechanism in the KOSDAQ market. This marks the 43rd activation of the sidecar mechanism in the KOSPI market and the 27th in the KOSDAQ market this year. Of these, 23 were sell-side activations in KOSPI and 13 in KOSDAQ.

Samsung Electronics traded down 4.32% at 215,000 won, while SK Hynix fell 9.23% to 1.407 million won.

Concerns grew over Chinese memory manufacturer CXMT's listing on the Shanghai Stock Exchange, raising fears of expanded production capacity and intensified price competition in the memory industry. Doubts also surfaced regarding whether large-scale AI investments led by big tech companies would translate into actual profits. Leveraged exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix were also identified as factors driving sell-offs during the downturn.

SK Hynix announced that its second-quarter consolidated revenue reached 79.3187 trillion won, operating profit hit 60.5426 trillion won, and net income totaled 93.9226 trillion won. Compared to the same period last year, revenue increased by 256.8%, and operating profit surged by 557.2%, marking record highs for both metrics in a single quarter.

Kim Yong-beom, Jeong Chaek (Head) of Cheong Wa Dae accompanying President Lee Jae-myung on his state visit to Brazil, stated during a press conference on the 29th (local time) regarding stock market volatility: "We need to examine not only leveraged ETFs but also the overall situation." He added, "While leveraged ETFs may make volatility appear more pronounced, they are not the sole cause." According to Kim, the Financial Services Commission and the Financial Supervisory Service plan to investigate structural factors that uniquely contribute to heightened volatility in Korea's stock market.

Other stocks also declined: SK Square (-9.51%), Samsung Electro-Mechanics (-7.90%), Samsung Life Insurance (-5.79%), Samsung Biologics (-3.23%), LG Energy Solution (-3.03%), Samsung Electronics Preferred (-3.41%), KB Financial Group (-0.48%), and Hyundai Motor (-0.69%).

At the same time, the KOSDAQ index fell 39.21 points (5.56%) to 666.64. The intraday high was 719.39 (+13.54 points, +1.92%), and the low was 659.75 (-46.10 points, -6.53%). This is 258.83 points (27.97%) lower than last year's closing price of 925.47 and 562.78 points (45.78%) below the year-to-date high reached on April 27 (intraday 1229.42).

Individuals and institutional investors sold net 129.3 billion won and 29.2 billion won, respectively, while foreign investors bought net 154.4 billion won.