South Korea's KOSPI plunged more than 5 percent soon after the open, triggering a sell sidecar on the main board that temporarily suspended the validity of program sell orders.

The Korea Exchange said the KOSPI was down 381.32 points, or 5.64 percent, at 6,374.43 as of 9:09 a.m. on July 28.

The KOSPI opened at 6,400.27, down 355.48 points, or 5.26 percent, from the previous session. The intraday high was 6,413.57 and the low was 6,355.44.

As the decline widened, the sell sidecar was triggered on the main board at 9:06:02 a.m. The validity of program sell orders was suspended for 5 minutes after KOSPI 200 futures stayed down more than 5 percent from the previous session for 1 minute.

In the main board market, foreigners were net sellers of 330.4 billion won and institutions sold a net 123.9 billion won. Retail investors were net buyers of 457.0 billion won, absorbing supply.

Most of the top stocks by market capitalisation were falling.

Samsung Electronics was trading at 236,500 won, down 17,500 won, or 6.89 percent, from the previous session. SK Hynix was at 1,661,000 won, down 155,000 won, or 8.53 percent.

SK Square fell 9.22 percent and Samsung Electro-Mechanics slid 10.03 percent. Hyundai Motor was down 4.96 percent, LG Energy Solution fell 3.00 percent, Samsung Life dropped 6.74 percent and Samsung C&T was down 7.51 percent.

Samsung Biologics, meanwhile, rose 1.23 percent. KB Financial fell 0.17 percent, limiting its decline relative to others.

The Kosdaq was down 31.88 points, or 4.17 percent, at 732.98 from the previous session.

In the Seoul foreign exchange market, the won was trading at 1,470.50 per dollar, up 4.50 won from the previous session.

The weakness in domestic stocks is seen as stemming from declines in U.S. semiconductor shares such as Micron amid uncertainty from China, despite falling international oil prices and stable market rates following easing tensions between the United States and Iran.

Some analysis also suggests recent volatility in domestic stocks has passed its peak. As of July 27, the KOSPI 200 Volatility Index (VKOSPI) fell for a fifth straight session to 77.6 points, the lowest in about 33 trading sessions since June 8.

The share of turnover in single-stock leveraged and inverse products in total KOSPI turnover also stood at 31.3 percent, below the July average of 35.7 percent. The turnover ratio also fell to 77.7 percent from levels in the 100 percent range last week.

Han Ji-young (한지영), a researcher at Kiwoom Securities, said, "The absolute level of volatility remains high, but entering a downward stabilisation phase can be a signal that the Korea-specific abnormal amplification of volatility has passed its peak," adding, "A staggered buying strategy focused on leading stocks is effective during pullbacks."