South Korea’s stock market was trending yesterday, thanks to a circuit breaker.
On Thursday, October 15, the Korea Composite Stock Price Index (KOSPI) plunged 7.57% at the close to 5,554.22 points. It briefly sank as much as 9.29% intraday, triggering the circuit-breaker mechanism and halting all trading for 20 minutes. It was the first circuit breaker in the South Korean market since July 29, and the 10th this year. The KOSDAQ, the country’s junior market, also triggered a circuit breaker, closing down 7.65%.
[Cause] The spark came from across the ocean. US CPI rose 3.7% year over year in September, above market expectations of 3.6%. Markets repriced the prospect of further Federal Reserve rate hikes, sending the 10-year US Treasury yield surging above 5%. More than half of the South Korean stock market’s value is concentrated in two chipmakers, Samsung Electronics and SK Hynix. With AI infrastructure burning through cash and returns still a long way off, any reversal in rate expectations puts these two stocks first in the firing line. On Thursday, Samsung Electronics fell 9.5% and SK Hynix dropped 11.1%.
[Developments] Foreign investors have been net sellers for eight consecutive trading days, dumping 3.63 trillion won (about $2.7 billion) in a single day. Retail investors and domestic institutions stepped in to buy, purchasing 1.29 trillion won and 1.69 trillion won, respectively. The index has fallen for seven straight trading days, shedding a cumulative 21% and closing at its lowest level since April 7. South Korea’s financial authorities held an emergency meeting that day and said they would respond swiftly and maintain market stability.
[Impact] For crypto markets, this isn’t someone else’s problem. South Korea’s plunge is essentially an extreme case of valuations getting crushed by interest rates: no matter how compelling the AI story, it can’t overcome a repricing of the cost of capital. $BTC has likewise been struggling around the $80,000 level in recent days, while outflows from spot ETFs continue. The pullback in risk appetite is the same force at work. JPMorgan’s South Korea strategist said bluntly that Samsung and SK Hynix have exhausted their buyback plans, and the market is looking for new buyers. There’s still no sign of a short-term bottom.
The more immediate signal is the calendar: the FOMC meeting on October 27–28 is less than two weeks away, and will be Warsh’s first real test since taking office. Until the hand of interest rates loosens its grip, don’t expect a satisfying rebound in either stocks or crypto. The circuit breaker pressed pause on trading—not on panic.
#KOSPICloses7.57%LowerTriggeringCircuitBreaker
#美联储 #SouthKoreanStockMarket
This is not investment advice. DYOR; trading involves risk.
On Thursday, October 15, the Korea Composite Stock Price Index (KOSPI) plunged 7.57% at the close to 5,554.22 points. It briefly sank as much as 9.29% intraday, triggering the circuit-breaker mechanism and halting all trading for 20 minutes. It was the first circuit breaker in the South Korean market since July 29, and the 10th this year. The KOSDAQ, the country’s junior market, also triggered a circuit breaker, closing down 7.65%.
[Cause] The spark came from across the ocean. US CPI rose 3.7% year over year in September, above market expectations of 3.6%. Markets repriced the prospect of further Federal Reserve rate hikes, sending the 10-year US Treasury yield surging above 5%. More than half of the South Korean stock market’s value is concentrated in two chipmakers, Samsung Electronics and SK Hynix. With AI infrastructure burning through cash and returns still a long way off, any reversal in rate expectations puts these two stocks first in the firing line. On Thursday, Samsung Electronics fell 9.5% and SK Hynix dropped 11.1%.
[Developments] Foreign investors have been net sellers for eight consecutive trading days, dumping 3.63 trillion won (about $2.7 billion) in a single day. Retail investors and domestic institutions stepped in to buy, purchasing 1.29 trillion won and 1.69 trillion won, respectively. The index has fallen for seven straight trading days, shedding a cumulative 21% and closing at its lowest level since April 7. South Korea’s financial authorities held an emergency meeting that day and said they would respond swiftly and maintain market stability.
[Impact] For crypto markets, this isn’t someone else’s problem. South Korea’s plunge is essentially an extreme case of valuations getting crushed by interest rates: no matter how compelling the AI story, it can’t overcome a repricing of the cost of capital. $BTC has likewise been struggling around the $80,000 level in recent days, while outflows from spot ETFs continue. The pullback in risk appetite is the same force at work. JPMorgan’s South Korea strategist said bluntly that Samsung and SK Hynix have exhausted their buyback plans, and the market is looking for new buyers. There’s still no sign of a short-term bottom.
The more immediate signal is the calendar: the FOMC meeting on October 27–28 is less than two weeks away, and will be Warsh’s first real test since taking office. Until the hand of interest rates loosens its grip, don’t expect a satisfying rebound in either stocks or crypto. The circuit breaker pressed pause on trading—not on panic.
#KOSPICloses7.57%LowerTriggeringCircuitBreaker
#美联储 #SouthKoreanStockMarket
This is not investment advice. DYOR; trading involves risk.