KOSDAQ buy sidecar halts program buys for 5 minutes as KOSPI rises 1.62%

South Korean stocks swung sharply before ending higher on Aug. 4, with the KOSPI closing up 1.62% at 6,358.95 after dropping as low as 6,080.25 early in the session and the KOSDAQ surging 5.88% to 780.72. The KOSDAQ buy sidecar was triggered at 10:47 a.m., marking the first time in the market's history that a buy-side sidecar was activated for three consecutive trading days. The rebound followed the previous day's more than 5% KOSPI plunge and was driven by rotation into non-semiconductor sectors as trading tied to single-stock leveraged and inverse ETFs linked to Samsung Electronics and SK Hynix dropped sharply after regulatory intervention. Retail investors were the main buyers on the KOSPI with net purchases of 818.5 billion won, while institutions led KOSDAQ buying with 543.4 billion won. Samsung Electronics and SK Hynix posted only modest gains and contributed less than 14 points to the KOSPI's advance, while sectors such as construction, IT services, telecommunications and metals outperformed and biotech names rallied across the KOSDAQ. Analysts said the crackdown on single-stock leveraged products appears to have dispersed liquidity that had been concentrated in large-cap semiconductor shares, even as concerns over memory supply, profit-taking in South Korea's chip sector and competition from Chinese manufacturers continued to weigh on sentiment. Wall Street remained constructive on SK Hynix, with Bank of America pointing to solid demand from U.S. technology companies and UBS and Rosenblatt Securities issuing bullish price targets after SK Hynix ADR rose 8.17% overnight. Investors are now watching whether earnings from U.S. semiconductor companies can help restore confidence in South Korea's chip sector. AMD reported second-quarter earnings per share of $1.66 and revenue of $2.3 billion, with data center revenue up 107%, but its shares fell in after-hours trading. Market participants also remain focused on the sustainability of AI spending, long-term U.S. interest rates, Middle East risks and signs of retail deleveraging as key factors for near-term volatility.