Korea Exchange triggers second day of KOSPI, Kosdaq halts as defensive stocks rally

The Korea Exchange triggered sell sidecars on both the KOSPI and Kosdaq on July 29 for a second straight session as South Korean stocks reversed early gains and fell sharply again, deepening a semiconductor-led selloff and prompting an emergency F4 meeting of top financial officials. The KOSPI closed at 5,663.24, down 5.98%, after shedding 1,092.51 points over two sessions and 864.5 trillion won in market value, while the benchmark’s July decline had already reached 28.9% as of July 28, steeper than the 27% drop in October 1997 during the Asian financial crisis. From its June 19 record of 9,385.59, the KOSPI has fallen enough that the market value lost by index constituents now exceeds Bitcoin’s roughly $1.3 trillion market capitalization. Constituents’ combined value fell from 7,670 trillion won, or about $5 trillion, to 4,960 trillion won, or about $3.4 trillion, over 29 trading days, a decline of about 35% in won and 32% in dollar terms as exchange-rate moves partly offset the drop. Market participants have increasingly linked the volatility to single-stock leveraged products tied to Samsung Electronics and SK hynix introduced in late May, even as officials said those products were only one factor among several. Retail investors kept buying through the slide, with individuals net purchasing 1.1584 trillion won of KODEX Leverage from July 1 through July 29, including 266 billion won on July 29, while Citi estimated retail losses in leveraged ETFs tied to Korean assets at about $38.7 billion. South Korea’s National Pension Service remained only a limited stabilizing buyer, and analysts said the market was reassessing support levels after the KOSPI fell below 6,000 intraday. Against the broader rout, institutional money rotated into defensive sectors including food, cosmetics and apparel. Dalba Global rose to an intraday record of 275,500 won, supported by stronger overseas earnings expectations, growing ownership by long-term investors including the NPS and Fidelity International, and shareholder-return measures such as a planned cancellation of 63,364 treasury shares.