KOSPI Plunges 5.46% as Chip Rout Triggers Sell-Side Sidecar

South Korean stocks fell more than 5 percent on Tuesday, extending their losing streak to a fifth session as a steep technology sell-off and renewed inflation concerns drove investors away from riskier assets.

The benchmark Korea Composite Stock Price Index closed down 348.89 points, or 5.46 percent, at 6,035.35 after opening 3.1 percent lower. The scale and speed of the decline prompted the Korea Exchange to activate a sell-side sidecar during morning trading after the index remained more than 5 percent lower for at least one minute. The mechanism temporarily curbs program selling when market moves become unusually sharp.

Foreign investors led the retreat, selling a net 4.51 trillion won, equivalent to about $3.35 billion, in local shares. Institutions bought a net 1.69 trillion won, while individual investors purchased a net 2.23 trillion won. Trading volume reached 399.87 million shares worth 26.79 trillion won, and declining stocks outnumbered gainers by 628 to 246.

Semiconductor companies recorded the heaviest losses. Samsung Electronics dropped 7.39 percent to 232,000 won, while SK hynix tumbled 10.09 percent to 1.44 million won. Reports of rapid technological advances by Chinese memory-chip maker ChangXin Memory Technologies added to pressure on the sector. Investors were also weighing concerns about artificial intelligence industry revenue and the end of share buyback programs at major Korean chipmakers.

Weakness spread beyond technology. Hanwha Aerospace fell 2.67 percent to 839,000 won, and Hyundai Motor declined 1.56 percent to 315,000 won. A small number of major stocks gained ground, with shipping company HMM rising 1.15 percent to 22,050 won and Korea Electric Power Corp. advancing 2.1 percent to 29,150 won.

The won weakened alongside equities. It was quoted at 1,345.1 won per US dollar at 3:30 p.m., compared with 1,335.1 won at the previous trading session’s close.

Global cues offered little support. US markets had ended mixed overnight, with the Dow Jones Industrial Average gaining 0.38 percent and the technology-heavy Nasdaq Composite falling 0.44 percent. Attention is now turning to the US consumer price index report due Wednesday in the United States. The data could shape expectations for the Federal Reserve’s policy direction ahead of its October rate-setting meeting, leaving Korean markets exposed to further swings in technology shares, currencies and foreign capital flows.