Korea Exchange triggers sell-side SIDECAR after KOSPI falls more than 5%

South Korean equities remained under heavy pressure on August 7 after the previous session's rout, as the KOSPI erased an early gain of more than 1% and slipped back toward the 6,200 level while the KOSDAQ fell more than 2% and dropped below 800 again. By 10:25 a.m., the KOSPI was down 1.43% at 6,206.47 and the KOSDAQ had fallen 2.31% to 783.15, extending a selloff that began on August 6 when the benchmark KOSPI closed 4.58% lower at 6,296.38 after triggering a sell-side SIDECAR. The latest weakness was centered again on semiconductor shares, especially SK Hynix, which had dropped 10.37% a day earlier and fell another 3.7% intraday on August 7 after at one point sliding close to 5%. Foreign investors, who had been net buyers of more than 200 billion won early in the session, reversed to net selling of 16.2 billion won in the KOSPI market by mid-morning, while retail investors sold a net 209.8 billion won and institutions bought a net 251.6 billion won. In the KOSDAQ market, foreign and institutional investors sold a net 188.4 billion won and 55.1 billion won, respectively, while retail investors bought a net 237.4 billion won. The pressure followed a sharp August 6 exodus from semiconductor names, when foreign and institutional investors dumped more than 3 trillion won worth of Samsung Electronics and SK Hynix alone. Foreign investors sold a net 1.69 trillion won of SK Hynix and 726.8 billion won of Samsung Electronics, while institutions sold a net 421.8 billion won of SK Hynix and 277.6 billion won of Samsung Electronics. Foreign investors also sold a net 3.18 trillion won in the KOSPI electrical and electronics sector, underscoring a bearish turn on chip stocks. The immediate catalyst was disappointment over U.S. semiconductor company SanDisk's earnings, which showed a 51% sequential rise in fiscal fourth-quarter revenue but still missed market expectations, sending its shares down more than 5% in after-hours trading. SK Hynix also faced additional pressure from concern that a potential Nasdaq listing of its U.S.-based NAND flash subsidiary Solidigm could dilute shareholder value. SK Hynix said, "Solidigm is reviewing various options to strengthen competitiveness, but nothing has been confirmed as of now." A Reuters report that Samsung Electronics and SK Hynix plan to unveil expanded shareholder return measures did little to improve sentiment. Sector performance on August 7 was broadly negative, with construction, metals, securities and machinery among the weakest areas on the KOSPI, while only food and tobacco and chemicals advanced. On the KOSDAQ, machinery and equipment, non-metallic minerals and general services were among the biggest decliners, and most large-cap names were lower. The synchronized drop marked a reversal from August 6, when the KOSDAQ had managed to rise 0.26%, extending a five-session winning streak and reclaiming the 800 level on a closing basis for the first time since July 15.