South Korea's KOSPI and Kosdaq tumbled together. Sell sidecars were triggered intraday in both markets, while the Kosdaq fell below 800, sharply weakening investor sentiment.

On Tuesday, the KOSPI closed at 7,246.79, down 409.52 points, or 5.35 percent, from the previous session. The index opened down 203.83 points, or 2.66 percent, at 7,452.48, and at one point rebounded to the 7,700 level before extending its losses again. It showed large swings for a second straight day and slid as low as the 7,200 level.

In the main board market, foreign investors posted net purchases of 335.6 billion won. Retail investors and institutions posted net sales of 45.1 billion won and 337.7 billion won, respectively.

Most top market-cap stocks weakened. Samsung Electronics closed at 277,500 won, down 18,500 won, or 6.25 percent, from the previous session. SK hynix fell 125,000 won, or 5.68 percent, to 2,076,000 won.

SK Square fell 6.34 percent, Samsung Electro-Mechanics dropped 10.25 percent, Hyundai Motor slid 3.55 percent, LG Energy Solution fell 4.97 percent, Samsung Life dropped 7.73 percent, Samsung C&T lost 6.95 percent and Samsung Biologics fell 4.15 percent.

The Kosdaq also fell sharply. It closed down 46.23 points, or 5.56 percent, at 785.00. It dipped to the 778 level intraday, falling below 800.

Sell sidecars were triggered intraday in both the KOSPI and Kosdaq. The KOSPI recorded its 33rd sidecar of the year, and as the Kosdaq selloff continued, the effectiveness of program trading sell quotes was temporarily suspended.

The won-dollar exchange rate fell. At the close, the won stood at 1,501.30 per dollar, up 15.90 won, or 1.05 percent, from the previous session.

The market points to the failure of investor sentiment in semiconductor shares to recover after Samsung Electronics released preliminary second-quarter results as the key backdrop to the index decline.

Supply and demand pressure related to single-stock leveraged exchange-traded funds, and investor fatigue from consecutive sharp swings, also increased volatility, an analysis said.

Han Ji-young (한지영), a researcher at Kiwoom Securities, said, "Earnings and fundamentals are not being considered right now, and sentiment and supply and demand are creating an unreasonable plunge in stock prices," adding, "Today's plunge, following the previous day, has strong characteristics of oversold and excessive declines."