(LEAD) More market stabilization measures in store to ease panic sell-offs: finance minister

South Korea’s stock market faced a sharp sell-off linked to fears about AI-related regulations and weaker future demand for memory chips. The KOSPI fell more than 8 percent soon after opening, showing how quickly anxiety spread. The turmoil mattered because it threatened orderly trading and investor confidence.

Financial authorities responded with several stabilizing measures. Trading in KOSPI-listed shares was suspended for 20 minutes after the index plunged. They also announced that collateral regulation on loans used to buy stocks would be fully lifted for three months starting later this month. This could give investors and lenders more flexibility during the shock.

Finance Minister Lee Hyoung-il said officials were monitoring excessive anxiety and one-sided market movement. He said South Korea’s economic fundamentals remained solid and that more measures could follow if volatility accelerated. By 11:59 a.m., the KOSPI had recovered from its low but still stood 3.55 percent lower at 5,186.68.

A panic sell-off happens when many investors try to sell investments quickly because they fear larger losses. The article describes excessive anxiety and one-sided market movement during South Korea’s turmoil. The term explains the behavior behind a sharp decline, although the article does not give a formal definition.

Fear can create a feedback loop. One investor sells after seeing alarming news. Others see falling prices and interpret the decline as confirmation that danger is growing. They sell too, adding more supply while buyers become cautious. Prices can then fall faster, even before companies’ actual earnings or business conditions change.

That pattern was visible when the KOSPI plunged more than 8 percent shortly after opening. Officials said they were closely monitoring excessive anxiety and remained ready to act. Their response aimed to prevent temporary fear from becoming a wider loss of confidence and more disorderly selling.

The market’s fall was severe and unusually rapid. Shortly after the opening bell, the KOSPI benchmark plunged by more than 8 percent, reaching as low as 4,911.28. By 11:59 a.m., it had dropped 3.55 percent, or 191.22 points, to 5,186.68. These figures show both the depth of the early shock and some recovery from the low.

Trading was suspended for 20 minutes after the sharp plunge. A temporary halt pauses transactions rather than allowing prices to keep moving continuously. It gives market participants time to absorb information, assess orders, and reduce emotional reactions. The suspension does not guarantee that prices will recover.

In this case, the halt indicated that the decline had crossed a level requiring an automatic market safeguard. Authorities were also preparing other measures, including lifting collateral rules on stock-buying loans for three months. They said additional steps could follow if volatility accelerated further.

A stock-market trading suspension is a temporary pause in transactions. It prevents orders from executing for a set period when prices move too quickly or trading becomes unusually disorderly. The article reports that trading of KOSPI-listed shares stopped for 20 minutes after the benchmark plunged more than 8 percent.

The pause can help by interrupting a chain of fear-driven orders. Investors receive time to review news, reconsider prices, and decide whether to buy or sell. Market participants can also reassess the balance between available buyers and sellers. This may reduce confusion and slow extreme price movements, although it cannot remove the underlying concern.

South Korea’s suspension occurred as worries about AI-related regulations unsettled technology stocks and memory-chip demand. By 11:59 a.m., the KOSPI was down 3.55 percent at 5,186.68, after reaching 4,911.28. Authorities continued monitoring the market and warned that more measures were possible.

Collateral rules govern the assets or value investors must provide for loans used to buy stocks. When prices fall, lenders may demand more collateral or repayment. Investors who cannot meet those demands may have to sell shares quickly. The article says South Korea would fully lift such regulation for three months starting later this month.

The key mechanism is time and flexibility. If investors are not immediately required to provide additional collateral, they may avoid selling into a falling market. Fewer forced sales can reduce the supply of shares hitting the market at once. That can slow price declines and ease volatility, especially during a sudden panic.

The measure does not ensure prices will rise or remove the risks of borrowed investing. It is one stabilization tool announced while officials monitored excessive anxiety and one-sided movement. The authorities also said they were ready to take additional actions if market volatility accelerated.

The article links South Korea’s market turmoil to worries that tighter regulations on AI-related sectors could slow demand for memory chips. The source does not explain the technical supply chain in detail. In general, if AI companies face stricter limits, their expansion or equipment needs may weaken, reducing expected purchases of memory components.

Memory chips are important to the market’s technology outlook. If investors expect slower demand, they may lower forecasts for chip sales, revenue, and profits. They can sell shares before those outcomes appear in company accounts. Falling technology stocks can then pull down a broader benchmark, especially when investors react in the same direction.

That concern was reflected in the KOSPI’s sharp move. The index plunged more than 8 percent soon after opening and was still down 3.55 percent at 11:59 a.m. Officials said the economy’s fundamentals were solid, but they remained ready to respond if volatility increased.

Stock prices form through buying and selling orders. Buyers offer prices based on what they think a share is worth, while sellers accept or demand prices based on their own expectations. The article does not explain this process directly. In general, the latest price reflects the market’s changing agreement about future value.

Expected profits matter because investors buy claims on future business performance. If they believe regulation will reduce AI growth and memory-chip demand, they may expect lower company earnings. They can sell immediately, even though current sales and profits have not yet changed. Many similar decisions can move technology shares and then an entire index.

That expectation-driven process helps explain South Korea’s sudden turmoil. The KOSPI dropped more than 8 percent soon after opening, despite Finance Minister Lee Hyoung-il saying the country’s economic fundamentals were solid. Officials monitored the one-sided movement and prepared further stabilization measures if volatility accelerated.