A Record-Breaking Rollercoaster Year: KOSPI Surpasses Financial Crisis Volatility with 29 Sidecar Triggers

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

The domestic stock market is expected to be recorded as the most volatile year in the history of the Korean stock exchange, with unprecedented "bipolar" market patterns this year. So far this year, sidecar measures have been triggered 29 times, surpassing the record levels set during the 2008 global financial crisis, and circuit breakers have been triggered five times.

Yonhap News Agency

According to the Korea Exchange, on June 26, amid another sharp decline in the market, both a sidecar (temporary halt on program trading sell orders) and a circuit breaker (temporary trading suspension) were triggered in succession. This brings the total number of sidecar triggers on the KOSPI this year to 29 (15 for buy orders, 14 for sell orders), breaking the annual records set during both the global financial crisis and the pandemic, and marking an all-time high. Additionally, for the first time in stock market history, circuit breakers were triggered twice in a single week. Previously, on June 23, a circuit breaker was triggered due to the weakness in U.S. technology stocks.

The previous all-time record for sidecar activations was 26 in 2008, when the global financial crisis nearly brought the world’s financial system to collapse. However, this year, even before the first half ended, the sidecar was triggered 29 times, breaking the 18-year-old record. This is more than four times higher than the previous annual record of seven during the 2020 COVID-19 pandemic, a period when the market was gripped by fear. This demonstrates that drastic market swings have occurred at least once a week on average. It is also becoming common for a buy-side sidecar to be triggered just a day after a sell-side sidecar.

Even in terms of the circuit breaker—a stronger safeguard than the sidecar that restricts program trading quotes temporarily—this year has been extraordinary. Since the system was introduced in 1998, the circuit breaker has only been triggered 11 times on KOSPI, with five of those occurring this year. For comparison, there was one occurrence during the September 11 attacks in 2001, and two during the COVID-19 pandemic in 2020, highlighting how extreme this year’s volatility has become.

In the past, the sidecar and circuit breaker were invoked only when a major global risk event rocked stock markets. In 2008 and 2020, there were clear singular crises: a financial system breakdown or a pandemic panic. In contrast, this year the market is reacting more sensitively to multiple adverse developments. In March, the U.S.-Iran conflict, coupled with surging oil prices from the Middle East, dragged the index down due to geopolitical risks. Since June, concerns over interest rate hikes by the U.S. Federal Reserve, combined with weakness among global big tech and technology stocks, have shaken domestic semiconductor blue chips and spread shocks throughout the market.

The extraordinary volatility in Korea’s stock market is being described as unprecedented. Kim Hyojin, a researcher at Shin Young Securities, explained, "A two-way volatility panic, with dramatic surges and plunges alternating regularly, is historically only seen in crisis periods or during the collapse of bubbles—not during normal times. For Korea's stock index to be in a sharp uptrend while such two-way volatility is simultaneously erupting, as we see in 2026, is extremely unusual."

Shinhan Investment & Securities researcher Park Wooyeol also noted, "The KOSPI 200 Volatility Index (VKOSPI) surpassed 91 on June 9, and the 2026 average is 57.3, signaling a persistent high-volatility phase. The current situation—marked by sharply rising earnings forecasts and an index surge, with KOSPI volatility expanding—is highly exceptional. Since VKOSPI was first recorded in 2003, the only year both index levels and volatility rose together was 2007, but even then, a detailed analysis shows that the index rise and volatility increase did not actually occur in parallel."

Extreme concentration is cited as a factor amplifying market volatility. Researcher Kim explained, "The strong participation of retail investors and the shift in capital toward leveraged products (such as inverse and leveraged ETFs) are clearly signs of a late-stage overheating phase caused by excess liquidity."

This year, with Samsung Electronics and SK hynix driving the market rally, the two stocks together now account for more than half the KOSPI's total market capitalization. Moreover, the launch of single-stock leveraged exchange-traded funds (ETFs) focused on these companies has further increased market volatility.

Lee Jaewon, a researcher at Yuanta Securities, stated, "The recent rise in KOSPI has been fueled by concentrated net buying by individual investors into Samsung Electronics and SK hynix. Combined, these two now represent nearly 60% of the KOSPI by market capitalization, so their price swings are directly tied to the movements of the overall index. In addition, the introduction of single-stock leveraged ETFs and increased passive ETF inflows targeting top-cap stocks have amplified selling pressure even on minor market noise." He added, "With earnings forecasts for semiconductors continuing to be revised upward, this concentration of capital could intensify further."

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