In the KOSPI market this year, the volatility-dampening ‘sidecar’ has been triggered 20 times. This is the highest since the 2008 financial crisis. With the KOSPI rising rapidly and becoming more sensitive to external factors, sidecars are being triggered more frequently.

According to Korea Exchange on the 3rd, sidecars in the stock market have been triggered a total of 20 times this year. Since 2002, when Korea Exchange began compiling related statistics under the current trigger criteria, 25% of all KOSPI sidecar activations (80 in total) were concentrated into roughly five months of this year.

The sidecar is a mechanism introduced to mitigate the impact that sharp swings in the futures market have on the cash market. On the KOSPI, it is triggered when the KOSPI 200 futures price rises or falls by at least 5% from the previous close for at least one minute. Once triggered, the effectiveness of program trading quotes is halted for five minutes.

It is expected to surpass the previous record set during the 2008 financial crisis, the year with the most sidecar triggers. Back then, KOSPI sidecars were triggered 26 times in total.

This year, sidecars were triggered in February (3 times), March (7), April (3), May (6), and June (1 as of the 3rd), marking the first-ever streak of six consecutive months with sidecar triggers since statistics began.

The increased frequency is attributed to a semiconductor-led concentration and a sharp KOSPI surge. This year, led by Samsung Electronics and SK hynix, the KOSPI has soared 108.85%, ranking first in performance among major global markets. However, the rapid climb over a short period has amplified profit-taking whenever negatives such as the Middle East war emerge.

In fact, on the KOSPI this year, there have been 11 buy sidecars and 9 sell sidecars.

The securities industry expects a continued spell of volatility. Han Ji-young, a researcher at Kiwoom Securities, said, “The KOSPI has posted the highest rate of increase in its history since the start of the year” and added, “The combination of a soaring index and deepening sector polarization could lead to more pronounced intraday swings in the domestic market compared with other exchanges.”