KOSPI triggers sell-side circuit-breaker for 2nd straight session; index swings 5% to close flat

The KOSPI 200 futures contract fell 60.24 points, or 5.13%, to 1,112.46 at 09:19:22 KST on Monday, triggering the sell-side program sidecar — a mechanism that suspends algorithmic sell orders for five minutes when futures decline 5% or more for a sustained period. It was the second consecutive activation following a similar event on May 15, when the KOSPI cash index briefly topped the historic 8,046.78 threshold before collapsing toward 7,100.

Despite the panic-sell open, buyers stepped in decisively during the afternoon session. The KOSPI closed at 7,516.04, up 0.31%, recording a full-session swing of over 5 percentage points. Domestic retail investors absorbed more than KRW 2.5 trillion (approximately $1.66 billion) in net purchases to offset persistent foreign selling.

Foreign investors have now sold on eight consecutive trading sessions, with morning net selling on May 18 reaching KRW 559.8 billion. The cumulative 8-day net sell total exceeds KRW 4 trillion ($2.66 billion). The USD/KRW rate rose to 1,502.60 (+5.09 won) during early morning trade, pushing through the psychologically significant 1,500 level for the second time in four sessions.

The immediate catalyst was a surge in US Treasury yields: the 10-year note reached as high as 4.6% intraday, breaking the 4.5% resistance level, while the 30-year bond exceeded 5%. US President Trump's comments on the possibility of infrastructure strikes against Iran added geopolitical risk premium. South Korean 10-year government bond yields rose 2.2 basis points to 4.239%.

Blue-chip names tracked the early sell-off: Samsung Electronics (005930.KS) closed at KRW 264,000 (-2.40%), SK Hynix (000660.KS) at KRW 175,000 (-3.79%), Hyundai Motor fell 4.43%, and LG Energy Solution declined 3.0%. Hanwha Aerospace gained 2.88% as defense names benefited from rising geopolitical tension.

After touching a historic high of 8,046.78 on May 15, the KOSPI has retreated 6.6% to 7,516. Market participants now focus on whether the Bank of Korea's Monetary Policy Committee meeting (late May) will provide stabilizing guidance amid rising US yield pressure.