Trading in Kospi stocks halted for five minutes as index dives

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Trading in Kospi stocks halted for five minutes as index dives

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The Korea Exchange halted trading in Kospi stocks for the first time in eight years as panic selling hit indexes for another day globally on concerns about the coronavirus outbreak and its lasting economic impact.

The halt came just a few days after trading in the U.S. equity markets was suspended for 15 minutes Monday following a 7 percent decline in the S&P 500.

The Korea Exchange’s Thursday maneuver is called a side car. Under local rules, trading is halted for five minutes if Kospi 200 index futures move more than 5 percent. Like the U.S. circuit breakers initiated on Monday, a side car is designed to reduce volatility.

The last sidecar for Kospi stocks was triggered eight years and five months ago.

Korean stocks started Thursday only slightly down despite the coronavirus outbreak being upgraded by the World Health Organization to a pandemic. The Kospi was down a bit more than 1 percent in first hour of trading.

The index nosedived after U.S. President Donald Trump gave a televised address. It was seen as offering no real direction forward.
Investor anxiety intensified after he announced a ban on travel from Europe to the United States for the next 30 days.

At one point, the Kospi traded as low as 1,808.77, down 5.2 percent. It recovered to as high as 1,850.56 before settling back.

The Kospi closed at 1,834.33 Thursday, posting a 3.87 percent drop compared to the previous trading day. The Kosdaq market closed at 563.49, shedding 5.39 percent.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]

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