Volatility Interruption (VI) triggers on both KOSPI and KOSDAQ have surged sharply as wild market swings continue amid the fallout from the Middle East conflict.
According to the Korea Exchange on the 13th, VI triggers in March—following the outbreak of war between the U.S.-Israel alliance and Iran—reached 2,627 on KOSPI and 9,338 on KOSDAQ. The combined total of 11,965 triggers is 2.5 times the monthly average of 4,656 recorded last year, and nearly double the previous monthly high of 7,430 set in April of last year.
KOSDAQ showed particularly pronounced volatility. March VI triggers on KOSDAQ nearly doubled to 9,338 from 4,861 in February. KOSPI also rose from 1,547 to 2,627 over the same period. The larger price swings on KOSDAQ are attributed to the market's higher concentration of small and mid-cap growth stocks, making it more sensitive to external shocks.
The volatile conditions have continued into April. From April 1 to 10, VI triggers totaled 712 on KOSPI and 2,641 on KOSDAQ. Given that mid-April has not yet passed, total triggers for the month could approach March levels. Market observers note that short-term price spikes and drops are recurring as geopolitical risks remain unresolved.
Sidecar activations have also increased. The KOSPI market has seen 13 buy and sell sidecars triggered this year—3 in February, 7 in March, and 3 so far in April. This is half the 26 sidecars recorded during the 2008 global financial crisis, the all-time high. Sidecars are designed to cushion market shocks from surging program trading, and their increased frequency signals elevated market volatility.
Experts expect the volatile market conditions to persist for the time being, as geopolitical uncertainty continues with no clear progress in U.S.-Iran negotiations. Macro factors including high oil prices and rising exchange rates are further dampening investor sentiment. "The breakdown in talks is a short-term negative, but the framework for a ceasefire remains intact," said Kim Du-eon, a researcher at Hana Securities. "If West Texas Intermediate (WTI) prices remain above $115 for an extended period, we would need to take a more conservative stance on Korean equities."
Meanwhile, despite the breakdown of the first round of U.S.-Iran negotiations, KOSPI closed at 5,808.62, down 50.25 points (0.86%) from the previous session, holding above the 5,800 level.
