South Korean stock market repeatedly 'trips circuit breakers'

South Korean stock market indices plunged this morning, prompting authorities to repeatedly activate trading suspension mechanisms.

On 28/7, the Kospi 200 Futures index on the South Korean stock market opened down 5,2%. This drop prompted the Korea Exchange to activate a sell-side sidecar mechanism, temporarily halting automatic sell orders for 5 minutes. This marks the 22nd time this mechanism has been used this year.

The Kosdaq index also fell more than 3% after opening, triggering a similar trading halt mechanism.

The Kospi index, a key benchmark for the South Korean stock market, also dropped 8% at one point, leading authorities to implement another 20-minute trading suspension.

Leading stocks Samsung Electronics and SK Hynix saw declines of up to 11% and 10,5%, respectively. Analysts attribute the market's downturn to the recent initial public offering (IPO) of Chinese chipmaker CXMT, which was Asia's largest this year. CXMT's shares surged over 400% on its Shanghai debut on 27/7.

Investors are concerned that CXMT could become a competitor to South Korean memory chip companies like Samsung Electronics and SK Hynix. After 10 years of operation, CXMT has emerged as China's leading DRAM producer. The Wall Street Journal (WSJ) described CXMT as a "bright star" among Chinese semiconductor firms, expected to enhance Beijing's self-sufficiency in its competition with Washington.

Additionally, news that a Chinese company began producing deep ultraviolet (DUV) lithography machines this year added pressure to the market. Analysts suggest this development could advance Beijing's self-sufficiency in DUV lithography, a field demanding high technological expertise.

In the Japanese stock market, semiconductor stocks are also declining. Tokyo Electron dropped more than 10%, Advantest lost 10,2%, and Kioxa fell over 17%. Telecommunications giant SoftBank's shares are currently down 6%.

News of CXMT also pressured US semiconductor stocks yesterday. By the close of trading, shares of giants like Nvidia, Micron, and AMD had fallen 2-5%.