The trigger for this sharp drop was the intense intraday selling by foreign and institutional investors. The fact that sidecars were launched in succession, starting from the KOSDAQ at 11:37 am and extending to the KOSPI market just 3 minutes later at 40 minutes, proves how quickly the market's fear mentality has spread. The situation in which the KOSPI 200 futures index plunged by more than 5% and the KOSDAQ 150 futures by more than 6%, and the program selling price was halted, is an unusual phenomenon that has been repeated in just 11 trading days since the 8th. In particular, in the stock market, the 27th sidecar has already been activated this year alone, which already exceeds the annual record during the financial crisis, suggesting that volatility in the domestic market has passed a critical point.

The fundamental cause of this slump is the extreme focus on leading semiconductor stocks. As supply and demand were excessively concentrated in stocks with high market capitalization, such as Samsung Electronics and SK Hynix, small fluctuations in these stocks caused a domino effect that dragged down the entire index. The securities market interprets this as a side effect of technical supply and demand imbalance rather than a collapse of fundamentals. Han Ji-young, a researcher at Kiwoom Securities, also analyzed that the reason the market collapsed despite stable macroeconomic indicators was because the supply and demand structure, which was overly dependent on certain sectors, could not withstand the wave of profit-taking sales.

Meanwhile, external negative news also contributed to dampening investment sentiment. In addition to doubts about the cost of investing in artificial intelligence (AI) infrastructure, which caused the decline of the US Nasdaq, the possibility of an interest rate hike by the Federal Reserve was mentioned again, stimulating investor anxiety. In addition, complex external variables, such as the decline in oil prices due to the previous negotiations with Iran, were mixed, making the direction of the market more uncertain. Amid this chaos, management companies are busy seeking self-help measures to mitigate the market shock, such as launching new ETF products that combine dividend avoidance strategies and covered calls to protect against volatility.

As the market continued to plunge, the defensive buying trend of individual investors stood out, but it was not enough to receive trillions of won worth of items pouring in from foreigners and institutions. Even during afternoon trading, the stock prices of major semiconductor companies plummeted by 5-8%, and the downward pressure on the market seems to be not going away. Rather than concluding that the current situation is a harbinger of a stock market peak or bubble bursting, experts view it as a transitional phenomenon that appears in the process of controlling the pace of the market. As a result, the activation of this sidecar is a warning again of how dangerous the ‘aesthetics of concentration’ in our stock market can be.