Opinion: South Korea's Stock Market Circuit Breaker has Failed, Failing to Effectively Halt Sell-offs

July 29th, today the KOSDAQ index plummeted over 8% intraday, triggering a Level 1 circuit breaker (activated when the index falls over 8% from the previous day's closing price and remains there for 1 minute).

The circuit breaker mechanism has struggled to effectively halt the sell-off. Previously, on July 28th, both the KOSPI and KOSDAQ successively triggered a Level 1 circuit breaker, but the KOSPI ultimately plunged by 10.84% and the KOSDAQ by 7.72%.

The core logic behind this round of plunges is a revaluation of AI semiconductor stocks compounded by structural issues in the Korean market. Samsung Electronics and SK Hynix together account for over 40% of the KOSPI market cap, and the movement of these two stocks can dictate the market direction.

Samsung Electronics is currently down 5.45%, while SK Hynix is down 9.81%.