The KOSPI is showing a sharp decline on the 19th, driven by the fallout of soaring long-term government bond yields in major economies.

According to the Korea Exchange, as of 9:15 a.m. today, the KOSPI stood at 6,429.25, down 440.58 points (6.41%) from the previous trading session.

The index opened down 341.06 points (4.96%) at 6,528.77 and has been expanding its losses.

Due to the plunge, a sell sidecar was triggered in the main bourse immediately after the market opened.

In terms of supply and demand, foreign and institutional investors net sold 780.4 billion won and 165.3 billion won, respectively, pulling down the index.

Individual investors alone were net buyers, purchasing 926.3 billion won.

This came as long-term U.S. Treasury yields surged, causing the three major New York stock indices to close lower across the board.

The Dow Jones Industrial Average fell 0.22% from the previous session, while the S&P 500 and Nasdaq Composite indices dropped 0.69% and 1.33%, respectively.

The breakdown of the extension of ceasefire talks between the U.S. and Iran heightened oil price pressures and inflation concerns, causing yields to surge and putting a burden on the stock market.

Consequently, the yield on the 30-year U.S. Treasury bond soared to the 5.33% range, hitting its highest level in 19 years since 2007.

This spike in yields spread to other countries as well, with Japan's 10-year government bond yield rising to 2.945% during the session, marking its highest level in about 30 years since 1996.

Long-term government bond yields in Germany and France also soared to their highest levels since 2011 and 2008, respectively.

In the domestic bond market, the 30-year and 50-year bonds broke all-time records the previous day, hitting 4.751% and 4.661%, respectively.

Weighed down by high interest rates, tech stocks such as Micron Technology (-7.06%), SanDisk (-8.89%), and Western Digital (-7.43%) tumbled significantly, and the Philadelphia Semiconductor Index fell 4.98%.

Heo Jae-hwan, an analyst at Eugene Investment & Securities, pointed out, "Competition to attract long-term funds has intensified due to the U.S. fiscal deficit, a surge in treasury issuances, and increased corporate bond issuance by big tech companies. Furthermore, the entrenchment of rising oil prices due to the deadlock in U.S.-Iran negotiations is a factor heightening long-term inflation uncertainty."

In the wake of this, Samsung Electronics and SK Hynix, the "semiconductor two top" that account for about half of the KOSPI's market capitalization, are down 7.64% and 9.63%, respectively.

In addition, SK Square (-11.98%), Samsung Life Insurance (-10.95%), and Samsung C&T (-8.40%), which hold stakes in these companies, are also experiencing steep declines.

Apart from these, almost all stocks within the top 50 by market capitalization turned to a "blue light" (declined), with the exception of Hanwha Aerospace (2.53%).

By sector, most industries are in a slump, including electrical and electronics (-7.80%), manufacturing (-6.87%), insurance (-6.58%), and finance (-6.49%).

However, Han Ji-young, an analyst at Kiom Securities, projected, "Since the downward pressure on the stock market driven by interest rates was already factored in through the previous day's plunge, the market is expected to show a trend of recovering its losses during the session."

In particular, she noted, "The proportion of single-stock leverage trading value has decreased from the 30% range in July to under 5% currently, and the VKOSPI (KOSPI 200 Volatility Index), which fluctuated around 80 to 90, has plummeted to the 50s." She added that the possibility of a recurrence of abnormal supply-demand deterioration and stock market crash like last month is low.

At the same time, the KOSDAQ index stood at 805.68, down 28.52 points (3.42%) from the previous session.

However, the losses appear to be narrowing somewhat thereafter.

After starting at 810.08, down 24.12 points (2.89%) from the previous trading day, the index has been showing declines of around 2% to 3%.

In the KOSDAQ market, individuals and institutions are net selling 33.9 billion won and 44.2 billion won, respectively, while foreigners are net buying 81.3 billion won.

Among top market cap stocks, Alteogen (-1.17%), EcoPro (-2.76%), and EcoPro BM (-2.38%) are declining, while EO Technics (0.85%) and Robotis (1.43%) are rising.

(Photo: Yonhap News)