Yikes, South Korean stocks

Eek:

*KOREA’S KOSPI EXTENDS DROP TO 10% AFTER TRADING RESUMES

It’s never going to be simple to diagnose the source of a drop this sharp — and it’s worth noting that despite slamming into the circuit-breakers and entering correction territory today, the Kospi is still absolutely on smoke over the past year or so (good stuff from Rob on this over on Unhedged earlier this week):

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We suspect these are war rattles, but what won’t have helped are the pretty ugly industrial production figures released earlier. Output dropped by 1.3 per cent in January after two months of gains — that’s anathema for a stock market rally that is absolutely powered by chips. Goldman’s Irene Choi writes:

Around three-fourths of the headline sequential losses were explained by declines in production of semiconductors (-4.4% mom sa) and transport equipment excluding autos (-17.5%), which could be related to seasonality noise from shifting Lunar New Year holidays.

Barclays’ Bum Ki Son says the dip is “[n]ot a good sign”, and indicates “price-driven growth rather than volume”.

We’ve written a lot recently about how fragile markets seem at the moment. Is this bending or breaking?