The KOSPI stopped trading for a second day running, a first, and the central bank told parliament that morning that rates still need to rise

Governor Shin Hyun-song spent Wednesday morning telling lawmakers that Korea is not finished raising interest rates.

He was delivering the Bank of Korea's business report to the National Assembly's Finance, Economy and Planning Committee, and his opening remarks, reported by Kim Hye-ran at the Seoul Economic Daily, said the Monetary Policy Board had lifted the base rate from 2.50 percent to 2.75 percent in July and judged that there is a need to continue the rate-hike stance. The bank's own page puts the current base rate at 2.75 percent and records the 25 basis point increase.

About ninety minutes later, the Korea Exchange turned the market off.

The halt

Trading in KOSPI-listed shares was suspended for 20 minutes from 12:31 p.m., after the index fell more than 8 percent from Tuesday's close, Yonhap reported. A sell-side sidecar, which pauses program trading rather than everything, had already fired at about 10:55 a.m.

It was the second day in a row that the KOSPI has been halted. The Seoul Economic Daily reports that this has never happened before on the main board. The KOSDAQ, which triggered its own sidecar and its own circuit breaker on Wednesday for the second straight session, has managed it twice previously, during the 2008 financial crisis and during the spread of the coronavirus in 2020.

One count does not reconcile and it is worth flagging rather than smoothing. Yonhap describes Wednesday's as the eighth circuit breaker the exchange has activated this year. This site reported Tuesday's KOSPI halt, citing the Korea JoongAng Daily, as already the eighth of the year and the fourteenth on record, and the KOSDAQ halted separately later that same Tuesday before both boards halted again on Wednesday. The two figures are counting different things, or one of them is wrong, and the desk could not establish which from published sources. The dates and times of the individual halts are not in dispute.

The numbers, mid-session

At 1:50 p.m. the KOSPI stood at 5,371.73, down 651.93 points or 10.82 percent. The index had opened at 6,089.11, up 1.09 percent, and then reversed.

Samsung Electronics was at 198,300 won, down 9.86 percent, losing the 200,000 won level. SK hynix was down 15.81 percent at 1.305 million won, on the morning it published a quarter in which net profit exceeded revenue. SK Square fell 14.05 percent and Samsung Electro-Mechanics 12.39 percent. Celltrion, up 1.35 percent, was close to the only large-capitalisation stock rising.

Individual investors sold a net 2.0061 trillion won of shares. Foreign investors turned net sellers in the afternoon, at 419.2 billion won. Institutions bought a net 2.4306 trillion won and it was not enough. The KOSDAQ was at 638.86, down 66.99 points or 9.49 percent.

What the market was told about why

Two explanations are on the record and both are attributed rather than asserted.

Yonhap wrote that investors sold semiconductor shares on skepticism about the scale of spending by large technology companies on artificial intelligence. Han Ji-young, a researcher at Kiwoom Securities, told the Seoul Economic Daily that it is unprecedented for the KOSPI to hit circuit breakers on two straight days and to fall 10 percent on two consecutive days, cited SK hynix earnings coming in under consensus, weaker expectations for shareholder returns and renewed uncertainty over talks between the United States and Iran, and said the substance of Wednesday's fall was holders locking in losses as hopes of a rebound faded.

That last characterisation sits oddly next to the SK hynix release itself, which reported record figures, and the tension is real rather than an error in one of them. A record quarter and a disappointing quarter are the same quarter measured against different expectations.

Shin's remarks left room in the same direction. He said the timing and pace of any further increases would be decided while reviewing inflationary pressure, the trend of economic improvement and financial stability conditions, and separately noted high volatility in financial and foreign exchange markets alongside the risk of accumulating financial imbalances, while judging the financial system to be generally stable.