Amid COVID Panic, Yeouido Stock Market Cries Out... "Better to Close the Market"

Sharp Drop Triggers Trading Halt and Sidecar
Global Panic Spurs Market Checks
Uncertain Market Faces Difficulty Revising Forecasts

[Asia Economy Reporter Song Hwajeong] "The situation is worse than during the global financial crisis." "It would be better to close the stock market for a day."

As the global stock markets have been in a state of panic due to the spread of the novel coronavirus infection (COVID-19), securities firms have also fallen into panic. With daily declines exceeding expectations, research centers are busy monitoring the market, and departments related to derivatives are closely watching overseas situations. However, with market movements already deviating from forecasts, they appear stunned, saying that future outlooks are meaningless.

On the 13th, the KOSPI opened at 1722.68, down 6.09% from the previous day, and the KOSDAQ started at 536.62, down 4.77%. Subsequently, the KOSDAQ's decline widened to 8%. Due to the sharp drop early in the session, a circuit breaker was triggered in the KOSDAQ to temporarily halt trading, and a sidecar, a temporary suspension of program sell orders, was activated in the KOSPI market. Later, a sidecar was triggered in the KOSDAQ market, and a circuit breaker was additionally activated in the KOSPI market.

A private banker (PB) at a securities firm said, "The situation is very bad," adding, "The US stock market has never fallen this fast recently, and as assets are declining simultaneously, there is a mood of neglecting asset deleveraging (debt reduction)." This PB added, "Even gold, considered a representative safe asset, is falling, so there is a sentiment that gold cannot be trusted either," and said, "It is worse than during the financial crisis." Another securities firm PB said, "During the 9/11 terrorist attacks, the US stock market was closed, and if such a relentless plunge continues as now, it might be better to close the market for a day," adding, "In situations like this, avoiding the storm is the priority."

Securities firms' research centers are busy monitoring the market. This is because the market has been falling sharply day after day, making previous forecasts meaningless. A representative from Securities Firm A said, "With the US market plunging again yesterday, the research center is operating urgently," adding, "We need to revise the forecasts, but even if we want to, we cannot because it is currently difficult to predict how far the market will fall." The representative explained, "The Bloomberg consensus will be released soon, and research centers will likely revise their forecasts based on that consensus." Earlier this week, most securities firms expected the lower band of the KOSPI to be around the 1800 level. However, with the index falling sharply for three consecutive days recently, the 1900 and 1800 levels have been consecutively broken.

There is also an emergency in departments related to derivatives. A representative from Securities Firm B said, "For principal-guaranteed products, the situation is critical," adding, "As global markets are simultaneously plunging, some products are inevitably incurring losses, and if losses occur, the securities firm must guarantee the principal, so we are closely monitoring the situation." A representative from Securities Firm C said, "Yesterday, the European stock market fell more than 10%, triggering an emergency for stability products," adding, "These products incur losses if they fall more than 10% in a day, and with the Euro Stoxx index dropping 12% yesterday, principal losses occurred for the first time."

Customer reactions are varied, so retail departments are making every effort to respond to clients. A representative from Securities Firm D said, "Retail customers are worried and making many inquiries, but some say they will just wait, while others are contacting us to buy now," adding, "We are doing our best to respond to each customer accordingly."

This content was produced with the assistance of AI translation services.