KOSPI Jumps 4.87%, Triggering Buy-Side Sidecar. Can This Rally Hold?

By 9:43 a.m. Tuesday in Seoul, the KOSPI had climbed 4.87% from Monday's close to 5,263.13. The surge prompted the Korea Exchange to halt program buying for five minutes.

This trading restriction, known as a buy-side sidecar, has been triggered several times since October 21. The next test for the KOSPI's recovery will be Tuesday's US Consumer Price Index (CPI) report.

Seoul's Buy-Side Sidecar Triggers Days After Circuit Breaker

The KOSPI opened at 5,247.22, 4.55% above Monday's close, according to a Chosun report citing Korea Exchange data. The sidecar kicked in near 9:06 a.m., with the KOSDAQ's version following about four minutes later.

SK Hynix shares led chipmakers, rising 7.48% from Monday's close to 1,221,000 won by 9:37 a.m. Samsung Electronics gained 5.32% to 200,000 won.

The rise was spurred by Wall Street, where the Philadelphia Semiconductor Index advanced 6.9% on Monday. Oil prices also dropped after President Donald Trump downplayed the possibility of renewed strikes on Iran.

However, recent trading data suggests this rally may be fragile.

Seoul's Two Prior Recovery Attempts Lost Momentum

The first surge occurred on October 21, when the KOSPI closed 3.29% higher at 5,735.66. According to BeInCrypto, the index gave back the entire gain within two sessions.

The sidecar was triggered on both October 27 and 28. On October 28, the KOSPI jumped 6.63% to 6,012.44, buoyed by SK Hynix's record quarter, the Korea JoongAng Daily reported.

That rally proved short-lived. On October 29, Samsung's shareholder return plan fell flat with investors, and the index slipped back below 6,000.

By November 5, the KOSPI had ended at 5,383.80, below the start of the late-October rally. The next day, an 8% drop triggered a circuit breaker.

Monday followed a similar but smaller pattern. The KOSPI was 1.52% higher in late morning but closed 0.81% lower at 5,018.85.

The US CPI data is scheduled for later Tuesday. A hotter reading could boost rate-hike expectations and hamper growth stocks. That will show whether the current sidecar rally can outlast its predecessors.