Kospi jumps more than 7% intraday to recover 8,000 level

Buy-side sidecars triggered on both Kospi and Kosdaq markets

Foreign investors extend net selling to 22 consecutive sessions, topping 81 trillion won (about $52.4 billion)

The Kospi and Kosdaq indexes and the won-dollar exchange rate are displayed on a board at Hana Bank's dealing room in Jung-gu, Seoul, on Tuesday, as the main index rebounded sharply to reclaim the 8,000 level a day after a steep sell-off. [Yonhap]
The Kospi and Kosdaq indexes and the won-dollar exchange rate are displayed on a board at Hana Bank's dealing room in Jung-gu, Seoul, on Tuesday, as the main index rebounded sharply to reclaim the 8,000 level a day after a steep sell-off. [Yonhap]

South Korean stocks staged a sharp one-day recovery from the "Black Monday" shock, with the Kospi surging more than 7% intraday to reclaim the 8,000 level. Buy-side sidecars were triggered simultaneously on both the Kospi and Kosdaq markets. However, foreign investors extended their net selling to 22 consecutive sessions and the Korean equivalent of the fear index hit a record high, leading analysts to caution that underlying market anxiety has not fully dissipated.

The Kospi stood at 8,024.72 as of 1:32 p.m. Tuesday, up 540.31 points, or 7.22 percent, from the previous session, according to Korea Exchange. The index opened up 213.35 points, or 2.85 percent, at 7,697.76 before extending its gains to push back above 8,000.

The early surge triggered a temporary suspension of program buy orders — known as a buy-side sidecar — on the main bourse. A buy-side sidecar was also activated on the Kosdaq market, reflecting a recovery in investor sentiment.

Global financial markets, which had been roiled by Monday's sharp sell-off, steadied after Israel and Iran both showed restraint from further strikes. Wall Street also rebounded, led by semiconductor and technology stocks, while a pullback in the won-dollar exchange rate provided additional support for domestic equities.

"Today's domestic market is expected to recover much of Monday's losses, led by oversold heavyweights such as semiconductor stocks, buoyed by the rebound in US chip shares, a more than 5.5 percent gain in overnight KOSPI 200 futures, and the easing of the sharp won-dollar surge following government intervention," said Han Ji-young, a researcher at Kiwoom Securities.

By investor type, institutions and retail investors were net buyers of 763.1 billion won and 53.1 billion won, respectively. Foreign investors, by contrast, were net sellers of 901.6 billion won, extending their selling streak to 22 consecutive sessions since May 7. Their cumulative net selling on the Kospi has now exceeded 81 trillion won.

Market analysts, however, say the recent foreign selling looks less like a structural exit from Korean equities and more like profit-taking and portfolio rebalancing following a sharp run-up in share prices.

"The fact that foreign net selling actually shrank even as the index plunged Monday suggests the recent selling is rebalancing in response to the sharp price gains, not a structural departure from the Korean market," said Lee Jae-won, a researcher at Yuanta Securities Korea. "Concerns about a supply-demand deterioration feeding on itself should ease."

Large-cap stocks rebounded across the board. Samsung Electronics was up 8.12 percent and SK Hynix gained 13.87 percent. SK Square rose 10.91 percent, Samsung Electro-Mechanics surged 16.23 percent, LG Energy Solution added 1.80 percent, Samsung Life gained 4.26 percent and Samsung C&T was up 4.53 percent.

The Kosdaq was also up sharply, gaining 63.60 points, or 6.98 percent, to 974.99 at the same time.

On the Kosdaq, foreign investors and institutions were net buyers of 189.3 billion won and 265.0 billion won, respectively, while retail investors were net sellers of 453.4 billion won.

Among top Kosdaq-listed stocks by market capitalization, Alteogen surged 14.16 percent, EcoPro BM rose 6.01 percent, EcoPro gained 4.75 percent, Rainbow Robotics added 3.28 percent, Jusung Engineering climbed 5.42 percent, Kolon TissueGene jumped 14.89 percent, Lino Industrial soared 16.80 percent and Wonik IPS advanced 15.16 percent.

Market volatility remained elevated. The KOSPI 200 Volatility Index, or VKOSPI — South Korea's equivalent of the fear index — rose 14.21 percent to 87.52, its highest level since Korea Exchange began tracking the data in 2009.


hajun825@heraldcorp.com