South Korean authorities temporarily halted sell orders under program trading on the KOSPI on Monday after the benchmark index slumped more than 5%, according to Bloomberg. The move came as a sharp, AI-driven sell-off swept across Asian markets, mirroring weak sentiment from Wall Street.
Why did South Korea halt program trading?
The halt was triggered after heavy algorithmic and program-driven sell orders accelerated losses in the KOSPI during early trade. South Korea’s exchange rules allow for a temporary suspension of program sell orders when market declines breach predefined thresholds, with the aim of curbing panic-driven volatility and restoring orderly trading.
Program trading, which includes index arbitrage and algorithmic strategies, tends to amplify intraday moves during periods of heightened stress. Monday’s action reflected concerns that automated selling was worsening the sell-off.
AI-linked stocks drag KOSPI sharply lower
The KOSPI’s decline was led by heavyweight chipmakers, with Samsung Electronics and SK Hynix falling between 4.8% and 6.5%. Sentiment toward AI-linked shares weakened after recent U.S. earnings raised questions about rising costs and near-term returns from heavy AI investments.
Losses in South Korea echoed broader weakness in tech-heavy markets globally, as Nasdaq futures slid around 1% during Asian trading hours.
Asia markets slide in tandem
The sell-off spread across the region. Hong Kong’s Hang Seng Index dropped 2.5%, while the Hang Seng TECH index fell over 3%. Japan’s Nikkei 225 declined 1%, Australia’s S&P/ASX 200 slipped 1.3%, and Singapore’s Straits Times Index eased 0.3%.
In mainland China, the CSI 300 fell 1.1%, while the Shanghai Composite declined 1.3%, pressured by weak domestic demand signals.
Macro concerns add to risk-off mood
Investor caution was reinforced by mixed China PMI data. China’s official manufacturing PMI remained below the 50 mark in January, signalling continued contraction, while a private PMI showed modest expansion among smaller export-focused firms.
Adding to global uncertainty, U.S. President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair. Warsh is widely viewed as hawkish, reviving concerns around tighter monetary conditions.
What markets are watching next
The halt in program sell orders helped stabilise trading conditions in South Korea, but sentiment remains fragile. Investors are closely watching upcoming U.S. earnings from Amazon and Alphabet, which are seen as key indicators for cloud computing demand and the sustainability of AI-driven capital spending.
Meanwhile, futures for India’s Nifty 50 traded flat at the open, reflecting a cautious but relatively resilient start compared with peers.
