KOSPI Sidecar Triggered 7 Times in March... Most Since Financial Crisis

Highest Number of Sidecar Triggers Since 12 in October 2008 Global Crisis

Extreme Volatility Driven by Middle East War Fallout

Since the outbreak of war between the United States and Iran, the Korean stock market has experienced repeated sharp fluctuations, pushing volatility to its highest levels since the 2008 global financial crisis. The sidecar mechanism, which is designed to mitigate volatility during sharp market swings, was triggered seven times on the KOSPI this month alone. This is the highest monthly figure in 17 years and 5 months, since October 2008 during the global financial crisis. As the Middle East conflict is expected to last longer than anticipated, and with both market interest rates and the exchange rate soaring, experts predict that this period of high volatility will continue for some time.

Most Sidecar Triggers Since the 2008 Global Financial Crisis

On March 24, the KOSPI opened at 5,638.20, up 4.30% from the previous trading day, and as of 9:35 a.m., it was trading at 5,562.22, up 2.84% from the previous day. At the same time, the KOSDAQ was up 3.03% at 1,130.41. The won/dollar exchange rate started the session at 1,490.9 won, down 26.4 won from the previous day, but subsequently rose to the 1,498 won range.

The Korean stock market was also affected by the overnight rebound in the U.S. stock market, which was fueled by remarks from U.S. President Donald Trump about resuming talks with Iran. Initially, President Trump had warned that if the Strait of Hormuz was not reopened by the morning of March 24 Korea time, he would devastate power plants inside Iran. However, just before the New York Stock Exchange opened, he announced the resumption of dialogue with Iran. He stated, "Based on deep and constructive talks with Iran, I have instructed the Department of Defense to suspend all military attacks on Iran's power plants and energy facilities for five days." As a result, international oil prices plunged by more than 10%, and all three major New York stock indices rose together.

With the situation in the Middle East changing rapidly every day, volatility in the Korean stock market has also increased significantly. So far this month, the sidecar mechanism has been triggered a total of seven times on the KOSPI, as of the previous day. Of these seven occurrences, four were sell-side sidecars and three were buy-side. The sidecar is triggered if the KOSPI200 futures rise or fall by more than 5% from the previous day and remain at that level for one minute. When triggered, program trading's sell or buy orders are suspended for five minutes to help cool an overheated market.

This is the first time since October 2008, when it was triggered 12 times during the global financial crisis, that so many sidecar events have occurred in a single month. The frequent activation of volatility mitigation measures, despite the absence of a financial crisis, is due to the surge in international oil prices and market interest rates following the Middle East war, which has pushed market fear to the extreme. As South Korea, which relies heavily on Middle Eastern oil, is now seen as one of the countries most at risk from this war, the stock market has experienced sharp declines and the exchange rate has soared, leading to greater financial market volatility than in other countries.

The KOSPI200 Volatility Index (VKOSPI), often called the "Korean Fear Index," also reached an all-time high of 81.99 during intraday trading on March 5. Han Ji-young, a researcher at Kiwoom Securities, commented, "Over the past 15 trading days since March, the sidecar has been triggered about once every two days, indicating extremely high volatility," adding, "We are witnessing price swings that were not even seen during previous financial crises."

On the 24th, as expectations for war negotiations between the United States and Iran led to a rebound in the New York stock market, the won/dollar exchange rate also started lower. Employees are seen working in the dealing room at the Hana Bank headquarters in Seoul. On this day, the KOSPI index closed at 5,638.20, up 232.45 points (4.30%) from the previous trading day; the KOSDAQ rose 37.27 points (3.40%) to 1,134.16; and the won/dollar exchange rate began trading at 1,490.9 won, down 26.4 won. March 24, 2026 Photo by Cho Yongjun

Extreme Volatility Due to Middle East War Fallout... No Room for Relief Yet

Some analysts argue that the extreme volatility is not only due to the impact of the war but also because the Korean stock market has risen more sharply than any other major global market since last year, prompting concerns about a bubble. Bank of America (BofA) diagnosed the recent volatility in the Korean stock market in a recently published report as "textbook examples of a bubble." The report pointed out that index movements such as a 12% plunge followed immediately by a 10% surge resemble the extreme instability seen during the 1997 Asian financial crisis, the dot-com bubble, and the 2008 U.S.-led financial crisis.

Experts believe that heightened volatility in the Korean stock market is likely to persist for the time being. Kang Dae-seung, a researcher at SK Securities, explained, "Since the outbreak of the Iran war, rising oil prices and spreading concerns over defaults in the private loan market have dampened investor sentiment across all risk assets. The multiple sidecar and circuit breaker triggers on the KOSPI signal that market anxiety has reached a peak in the short term."

There is also cautious optimism that corporate earnings may provide support for the market floor. Kim Doo-eon, a researcher at Hana Securities, stated, "If we closely examine historical precedents, Middle East conflicts have repeatedly shown a pattern where, right after panic sentiment peaks, unofficial diplomatic channels are used to seek an exit. Such precedents strongly suggest that panic selling is unlikely to persist for an extended period."

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