Kospi jumps 612 points, or 8.18%, to reclaim 8,000 level in record single-day advance

Buy-side sidecar triggered on both Kospi and Kosdaq markets

Foreigners extend net selling to 22 consecutive trading days; cumulative outflow tops 83 trillion won (about $53.7 billion)

The Kospi is displayed on an electronic board at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Tuesday. The index closed at 8,096.93, up 612.52 points, or 8.18%, from the previous session. [Yonhap]
The Kospi is displayed on an electronic board at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Tuesday. The index closed at 8,096.93, up 612.52 points, or 8.18%, from the previous session. [Yonhap]

South Korean stocks bounced back sharply Tuesday, one day after a "Black Monday" selloff. The Kospi surged more than 8% to reclaim the 8,000 level, setting a record for the largest single-day point gain in the index's history. Buy-side sidecars were triggered on both the Kospi and Kosdaq markets.

However, foreign investors extended their net selling to 22 consecutive trading days, and South Korea's fear gauge hit an all-time high, leaving analysts to conclude that underlying market anxiety has not fully dissipated.

According to Korea Exchange, the Kospi closed at 8,096.93 on Tuesday, up 612.52 points, or 8.18%, from the previous session. The index opened at 7,697.76, a gain of 213.35 points, or 2.85%, and extended its advance throughout the day to retake the 8,000 mark. The 612.52-point rise is the largest single-day point gain on record, surpassing the previous record of 606.64 points set on May 21.

As the early surge accelerated, a buy-side program trading halt — known as a buy sidecar — was triggered on the main bourse at around 9:12 a.m. A buy sidecar was also activated on the Kosdaq market at around 9:28 a.m.

Global financial markets, which had sold off sharply the previous day, stabilized as Israel and Iran showed restraint from further strikes. Wall Street also rebounded, led by semiconductor and technology stocks, and a pullback in the won-dollar exchange rate provided additional tailwinds for domestic equities.

"Today's domestic market is expected to recover much of Monday's losses, led by oversold semiconductor and other large-cap names, supported by the rebound in US semiconductor stocks, a more than 5.5% gain in overnight KOSPI 200 futures, and the easing of the sharp won-dollar exchange rate surge following government intervention," said Han Ji-young, a researcher at Kiwoom Securities.

By investor type, institutions were net buyers of 2.5043 trillion won on the main board. Foreigners and retail investors were net sellers of 2.0071 trillion won and 616.9 billion won, respectively. Foreign investors have now posted net selling for 22 consecutive trading days since May 7. Their cumulative net selling on the Kospi through Tuesday totaled 83.3887 trillion won.

Analysts in the brokerage industry say the recent foreign selling reflects profit-taking and portfolio rebalancing following a sharp run-up in share prices, rather than a structural exit from the Korean market.

"The fact that the scale of foreign net selling actually shrank even as the index plunged on 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 vicious cycle of panic selling feeding more panic selling can be set aside for now."

Large-cap stocks rebounded across the board. Samsung Electronics closed up 8.97% at 322,000 won, while SK Hynix surged 15.91% to finish at 2,215,000 won. SK Square gained 13.51%, Samsung Electro-Mechanics rose 18.39%, LG Energy Solution added 2.06%, Samsung Life advanced 4.66%, and Samsung C&T climbed 5.02%.

The Kosdaq index closed at 967.81, up 56.42 points, or 6.19%, from the previous session.

On the Kosdaq, foreigners and institutions were net buyers of 311.3 billion won and 200.9 billion won, respectively, while retail investors were net sellers of 511.8 billion won.

Among top Kosdaq stocks by market capitalization, Alteogen jumped 12.78%, EcoPro BM rose 5.13%, EcoPro gained 2.85%, Rainbow Robotics added 2.62%, Jusung Engineering climbed 4.87%, Kolon TissueGene surged 15.23%, Lino Industrial advanced 16.57%, and Wonik IPS rose 13.35%, all contributing to the index's advance.

"As the negative factors that triggered the short-term plunge eased, bargain-hunting flows returned to the domestic market," said Lee Gyeong-min, a researcher at Daishin Securities. "The gains were particularly pronounced among large semiconductor stocks that had fallen the most."

Lee added that the concentration in large-cap stocks that had driven the recent market rally also appeared to be easing. "The Kospi and Kosdaq advance-decline ratios rose to 52.2% and 50.1%, respectively, indicating that the number of rising stocks across the broader market increased," he said.

Still, market volatility remains elevated. The KOSPI 200 Volatility Index, or VKOSPI — South Korea's equivalent of the fear gauge — rose 19.05% to close at 91.23 on Tuesday, the highest level since Korea Exchange began tracking the data in 2009.


hajun825@heraldcorp.com