Kospi slides over 7% as chip stocks sink

Technology-led sell-off triggers circuit breakers on Kospi and Kosdaq, drags market back to July levels

South Korean stocks plunged Thursday as a technology-led sell-off sent Samsung Electronics and SK hynix down roughly 10 percent, triggering circuit breakers on both the Kospi and Kosdaq.

The benchmark Kospi tumbled 7.57 percent to close at 5,554.22, extending losses throughout the session after opening 5.59 percent lower. It was the first time for the index to close in the 5,500 point range since wrapping up at 5,593.56 on July 30.

During the session, the index fell more than 9 percent to an intraday low of 5,450.81, briefly slipping below the 5,500 mark, before paring some of its losses toward the close.

The sharp decline triggered a sell-sidecar at 9:07 a.m., temporarily suspending sell orders in index futures-linked program trading. A circuit breaker followed at 12:38 p.m., halting trading across the market for 20 minutes.

Foreign investors led the sell-off, offloading shares worth 3.62 trillion won ($2.68 billion) on the bourse. Individual and institutional investors moved to buy the dip, recording net purchases of 1.29 trillion won and 1.69 trillion won, respectively.

The sharp sell-off reflected concerns that the Federal Reserve could raise interest rates further following the release of US consumer price index data. The figure rose 0.6 percent in September from a month earlier, marking its fastest monthly increase since April.

Chipmakers bore the brunt of the sell-off. SK hynix sank 11.06 percent to 1.26 million won, while Samsung Electronics plunged 9.48 percent to 210,000 won. Earlier in the session, the shares of the chip giant had fallen more than 10 percent as well, hitting as low as 204,500 won.

Losses spread across technology stocks, with Samsung Electro-Mechanics plunging 15.36 percent to 1.16 million won and SK Square shedding 10.21 percent to 765,000 won.

The tech-heavy Kosdaq also suffered steep losses, closing down 7.65 percent at 760.82. The sell-off triggered a sell-sidecar at 9:12 a.m. and a circuit breaker at 12:23 p.m.

It was the first time since July 29 that both markets had activated circuit breakers on the same day.

The offshore sell-off pushed the won past the 1,350-per-dollar mark, with the currency weakening to an intraday low of 1,353. The won was quoted at 1,343.18 per dollar as of 3:30 p.m., losing value by 6.3 won from the previous session.

"Volatility is expected to persist in the near term," Mirae Asset Securities analyst Kim Seok-hwan said.

"As domestic supply-demand conditions deteriorate, the market has become more sensitive to external risks, while a near-term improvement in the global environment appears unlikely."