KOSPI and KOSDAQ Both Plunge Over 8%... KOSPI at 1461.51, Circuit Breaker Activated (Update)

[Asia Economy Reporter Oh Ju-yeon] On the 19th, both the KOSPI and KOSDAQ indices plunged over 8%, triggering circuit breakers in both markets.

On the 19th, the KOSPI index opened at 1,626.09, up 34.89 points (2.19%) from the previous trading day. Dealers are working in the Hana Bank dealing room in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

As of 12:05 PM that day, the KOSPI fell more than 8% compared to the previous trading day, activating the circuit breaker. The KOSPI collapsed helplessly to 1461.51. This is a drop of more than 30% compared to January 20, before the spread of the novel coronavirus infection (COVID-19). As a result, stock prices returned to the levels seen in 2009.

At this time, among about 900 listed stocks on the exchange, only 9 stocks were rising.

Samsung Electronics broke below 43,000 won, falling to 42,800 won, and SK Hynix (-6.02%), Hyundai Motor (-6.39%), LG Chem (-11.43%), Samsung SDI (-12.64%) also dropped sharply.

Despite such a market, individual investors continue to net buy.

In the KOSPI market, individuals scooped up stocks worth 207.3 billion won, maintaining a net buying streak for 11 consecutive trading days. Foreigners sold off stocks worth 385 billion won, and institutions net bought stocks worth 130.6 billion won.

Since the beginning of this month, individuals have been buying stocks every day except for the 4th (-3.8 billion won).

According to the Korea Exchange, analyzing monthly net buying amounts of individuals over the past 12 years and 3 months from January 2008 to this month, the total net buying amount by individuals in the KOSPI market from the 1st to the 18th of this month reached 8.3863 trillion won, marking the highest level in 10 years.

This is interpreted as the decline caused by COVID-19 being seen as an opportunity for bargain buying.

The KOSDAQ index also plunged more than 8% compared to the previous trading day, triggering a circuit breaker. The KOSDAQ index recorded 444.61.

The won-dollar exchange rate showed a sharp rise, approaching the 1,300 level.

In the Seoul foreign exchange market, as of 11:05 AM that day, the won-dollar exchange rate surged 41.8 won from the previous day's closing price (1,245.7 won) to 1,287.5 won.

In the securities industry, the first critical threshold is judged to be around 1,310 won.

Researcher Lee Seung-hoon of Meritz Securities said, "1,245 won has served as a firm upper limit for the won-dollar exchange rate even during various financial market instability situations since the financial crisis, but it has been surpassed upward for the first time in over 10 years," adding, "If financial instability continues, won overshooting is possible, but the possibility of reaching 1,500 to 1,600 won per dollar, as experienced during the 2008 financial crisis, is low."

He continued, "Judging the first critical threshold of overshooting through the real effective exchange rate (REER), it is estimated to be around 1,310 won," and added, "Considering the possibility that the negative impact of COVID-19 and financial instability will largely disappear around the end of the second quarter, the forecast for the end of the first half is 1,200 won. However, if the COVID shock prolongs unexpectedly, won overshooting will strengthen and additional time will be required for a return to an appropriate level."

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