The daily average trading value of KOSPI 200 night futures has nearly tripled in three months since domestic overnight derivatives market launched in June last year, as the product continues to expand in scale. Daily average trading value by domestic retail investors also exceeded 3 trillion won for the second consecutive month. The surge is attributed to a sharp increase in investors using the night futures market to predict regular trading session trends, as the domestic stock market has experienced extreme volatility following its record-high rally.
According to Korea Exchange (KRX) on Thursday, the daily average trading value of KOSPI 200 night futures (combined buy and sell amounts) reached 13.651 trillion won last month, up 15.6% from the previous month's 11.81 trillion won. The daily average trading value, which stood at 4.91 trillion won in December last year, has grown approximately 2.8-fold in three months.
KOSPI 200 night futures refer to KOSPI 200 futures products traded during nighttime hours, from 6 p.m. to 5 a.m. the following day. Even considering that the KOSPI 200 index rose 22.9% from the end of December last year through the end of last month, the increase in trading value is interpreted as a result of a significant rise in the number of investors trading KOSPI 200 futures during nighttime hours.
A closer look at the KOSPI 200 night futures trading value trend shows that retail investor interest has also expanded dramatically. Retail investors' daily average trading value in KOSPI 200 night futures first surpassed 3 trillion won in February at 3.249 trillion won and remained at 3.289 trillion won last month. Compared to December last year at 1.318 trillion won, that represents an approximately 2.5-fold increase.
Despite night futures being primarily a derivatives product for global investors, retail investors account for approximately one-quarter of total trading value. This is a substantial figure even compared to the KOSPI market's daily average trading value of 25.568 trillion won last month.
Growing interest in KOSPI 200 night futures stems from the product's role as a guide for predicting regular session trends. KOSPI 200 night futures continue trading even after the alternative exchange's after-market closes at 8 p.m., meaning overseas stock market movements and geopolitical events occurring during Korean nighttime hours are reflected in prices. With stock market volatility on the rise recently, KOSPI 200 night futures have established themselves as a must-check indicator before the regular trading session.
For example, when the KOSPI index plunged 4.47% the previous day following a speech by U.S. President Donald Trump, KOSPI 200 night futures also opened weak but closed up 2.19% in line with the U.S. stock market rebound during the session. The KOSPI then closed up 2.74% at 5,377.30 in the regular session on that day, reclaiming the 5,300 level. Foreign investors turned to net buying of 814.5 billion won for the first time in 12 trading days since the 18th of last month, adding momentum to the index's rise.
"Both trading volume and trading value in the night futures market have been on an upward trend since June last year," a KRX official said. "There are two types of demand: domestic investors who want to trade Korean stocks while watching the U.S. market overnight, and overseas investors who want to trade Korean stocks during their daytime hours."
Accessibility to derivatives products, including KOSPI 200 night futures, is expected to improve further going forward. KRX had previously offered nighttime trading through partnerships with U.S. and European exchanges before switching to a system of directly operating overnight derivatives trading in June last year. By the end of next year, the exchange plans to extend derivatives trading hours to 24 hours, a first in Asia. Currently, derivatives can be traded for 19 hours including the regular and nighttime sessions. After the extension, daytime and nighttime trading will no longer be separated and will take place on a single order book.
