This Year Sets Record for 'Extreme Bipolar' Market: Sidecar Triggered 29 Times, KOSPI Surpasses Financial Crisis Volatility

KOSPI Plunges on June 26, Triggers Sidecar and Circuit Breaker
Sidecar Activated 29 Times This Year, Surpassing 26 During Financial Crisis
Circuit Breaker Also Triggered 5 Out of 11 Times in History Just This Year
Market Concentration Fuels Unprecedented Volatility

The domestic stock market is expected to go down in history as the most volatile year ever, exhibiting an unprecedented "bipolar" trend in 2026. So far this year, the sidecar mechanism has been triggered 29 times, surpassing the record set during the 2008 global financial crisis, and the circuit breaker has been activated five times.

Yonhap News Agency

According to the Korea Exchange, on June 26, the market experienced another sharp decline, leading to back-to-back triggers of the sidecar (temporary suspension of sell orders in program trading) and the circuit breaker (temporary market halt) during trading hours. As a result, the number of sidecar activations in the KOSPI market has reached a total of 29 times this year (15 buy-side, 14 sell-side), breaking all previous annual records set during the global financial crisis and the pandemic, and setting a new all-time high. Additionally, for the first time in market history, the circuit breaker was triggered twice in a single week. Previously, on June 23, the circuit breaker was activated due to a slump in U.S. tech stocks.

The previous record for most sidecar activations was 26 times in 2008, when the global financial system was on the brink of collapse. However, this year, even before the end of the first half, the record has been broken with 29 activations, the highest in 18 years. This is more than four times the annual record (7 times) set during the COVID-19 pandemic in 2020, when the entire market was gripped by fear—effectively meaning wild market swings occurred at least once every week. There have also been frequent cases where a buy-side sidecar is triggered just a day after a sell-side sidecar activation.

Even considering the circuit breaker, which is a stronger market safeguard than the sidecar, this year is unprecedented. Since its introduction in 1998, the circuit breaker has only been triggered 11 times in the KOSPI, with 5 of those instances occurring this year. In comparison, it was triggered only once during the 9/11 terrorist attacks in 2001 and twice during the COVID-19 pandemic in 2020, highlighting the extreme volatility of the current market.

In the past, sidecar and circuit breaker mechanisms were activated by major negative events shaking global markets, but this year, they are being triggered even more frequently. In 2008 and 2020, market pressure stemmed from a single, clear cause—either financial system collapse or pandemic fears. However, in 2026, the market is reacting even more sensitively to multiple negative factors. In March, geopolitical risks such as the U.S.-Iran conflict and surging oil prices originating from the Middle East dragged down the index, and in June, concerns over Federal Reserve interest rate hikes, along with weakness in global big tech and tech stocks, have rattled major domestic semiconductor stocks and spread shockwaves across the market.

This level of extreme volatility in Korea's stock market is considered highly unusual. Hyojin Kim, a researcher at Shin Young Securities, commented, "Historically, this kind of two-way volatility shock, with sharp rises and falls alternating, is a unique indicator seen not during normal times, but during crises or bubble bursts. The current situation in 2026, where the index is rising strongly while experiencing simultaneous two-way shocks, is extremely rare."

Wooyeol Park, a researcher at Shinhan Investment Corp., also noted, "The KOSPI 200 Volatility Index (VKOSPI) surpassed 91 on June 9, and the 2026 average currently stands at 57.3, indicating the market has entered a phase of persistent high volatility. The current situation, where KOSPI volatility is expanding alongside sharp earnings estimate revisions and index surges, is highly exceptional. Since VKOSPI tracking began in 2003, the only other year where both the index level and volatility rose together was 2007, but even then, closer analysis shows that index gains and volatility expansion did not coincide."

Severe concentration of trades has been identified as a factor amplifying market volatility. Researcher Kim explained, "Circumstantial evidence points to strong participation from individual investors and concentrated inflows into leveraged products (such as inverse and leveraged ETFs), which, combined with overheated liquidity, are clear signs of a late-stage overheating phase."

Samsung Electronics and SK hynix have been the primary drivers of this year's market rally, and together now account for more than half of the KOSPI's total market capitalization. The launch of single-stock leveraged exchange-traded funds (ETFs) based on these two stocks has also contributed to heightened market volatility.

Jaewon Lee, a researcher at Yuanta Securities, analyzed, "Recently, the main driver behind KOSPI's rise has been concentrated net buying by individual investors, focused on Samsung Electronics and SK hynix. Together, these two stocks now account for nearly 60% of the KOSPI by market capitalization, and their price movements are closely linked to the index's fluctuations. In addition, the overlap of single-stock leveraged ETFs and passive ETF inflows concentrated in large-cap stocks has amplified selling pressure even in response to minor noise." He added, "Given ongoing upward revisions in earnings estimates due to favorable conditions in the semiconductor industry, this kind of concentrated inflow is likely to intensify further."

This content was produced with the assistance of AI translation services.