Seoul stock markets took a direct hit, with both major exchanges plunging sharply, amid concerns over artificial intelligence regulation following the Democratic Party's victory in the U.S. midterm elections.
According to the Korea Exchange on Friday, the KOSPI triggered a Stage 1 circuit breaker at 9:03 a.m., while the KOSDAQ activated a sell sidecar at 9:06 a.m. This marks the 11th activation of a Stage 1 circuit breaker in the KOSPI market this year, and the 17th activation of a KOSDAQ sell sidecar this year.
At the time the circuit breaker was triggered, the KOSPI index stood at 4,924.61, down 459.19 points (8.52%) from the previous day. This is the first time the KOSPI index has fallen below 5,000 in 277 days, since February 2.
The circuit breaker operates in three stages. A Stage 1 activation occurs when the index falls by 8% or more from the previous day for at least one minute, halting all trading for 20 minutes. If the index then falls by 15% or more, a Stage 2 activation is triggered, also halting trading for 20 minutes. If the index falls by 20% or more from the previous day, a Stage 3 activation is triggered, ending stock trading for that day.
At the time the KOSDAQ sell sidecar was activated, the KOSDAQ 150 futures stood at 1,027.12, down 90.65 points (8.10%) from the previous day, while the KOSDAQ 150 futures were at 1,029.00, down 87.60 points (7.84%).
A sidecar is a market stabilization mechanism that suspends the validity of program trading orders for five minutes. The KOSPI sidecar is triggered when the price of the KOSPI 200 futures rises or falls by 5% or more from the previous day's closing price for at least one minute. In the KOSDAQ market, a sidecar is triggered when the price of the KOSDAQ 150 futures rises or falls by 6% or more from the previous day's closing price for at least one minute.
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