The Kospi, which plunged more than 8% and triggered a circuit breaker on Monday, rebounded sharply Tuesday, surging more than 4% intraday and triggering a buy-side sidecar. Extreme volatility pushed South Korea's fear index to a record high.
According to Korea Exchange, the Kospi stood at 7,740.11 as of 10 a.m. Tuesday, up 255.70 points, or 3.42%, from the previous session. The index opened 213.35 points, or 2.85%, higher at 7,697.76 before extending gains to reclaim the 7,800 level. The early surge of more than 4% triggered a temporary suspension of program buy orders — known as a buy sidecar — on the main bourse. The Kosdaq market also activated a buy sidecar.
While the previous session's steep losses stabilized, foreign investors' continued selling and extreme volatility remained key concerns for the market. The KOSPI 200 Volatility Index, or VKOSPI — South Korea's equivalent of the fear index — surged 12.98% to 86.58, breaching the 80 level. At one point during trading it reached 87.03, the highest since the index was first published on April 13, 2009.
Tuesday's activation marked the 23rd sidecar trigger on the Kospi this year — 12 on the buy side and 11 on the sell side. Foreign investors extended their net selling streak to 22 consecutive trading sessions. Samsung Electronics and SK Hynix rose roughly 3% and 6%, respectively, recovering in a single session the 300,000-won and 2 million-won thresholds that had collapsed the previous day.
The won opened below 1,530 per dollar Tuesday as currency authorities signaled a stronger commitment to managing volatility. The Ministry of Economy and Finance and the Bank of Korea issued verbal interventions underscoring their resolve to act, while the national pension fund's resumption of currency hedging also weighed on the exchange rate.
moon@heraldcorp.com
