South Korea's stock market rebounded sharply Tuesday, a day after a steep decline triggered a circuit breaker. The Korea Exchange (KRX) successively activated buy-side sidecars, a temporary suspension of program buy orders, on both the KOSPI and KOSDAQ, and the KOSPI reclaimed the 8,000 level in the afternoon. The market's mood shifted dramatically in just one trading session, widening volatility in domestic stocks.
According to the exchange, the KOSPI stood at 8,059.77 as of 3:07 p.m., up 575.36 points, or 7.69%, from the previous trading day. The index opened at 7,697.76, up 2.85%, then extended its gains, triggering a buy-side sidecar. A buy-side sidecar is activated when KOSPI 200 futures (nearest month) rise 5% from the previous trading day and the move persists for one minute. The upward curve steepened in the afternoon, pushing the index back above 8,000 just one trading session after it had closed in the 7,400 range the previous day. The KOSDAQ also opened up 2.89% at 937.69, and its continued advance triggered a buy-side sidecar.
Most of the top market-cap stocks rose. Samsung Electronics (005930.KS) was trading at 319,750 won, up 8.21%, while SK hynix (000660.KS) was at 2,202,000 won, up 15.23%. Samsung Electronics reclaimed the 300,000-won mark, and SK hynix the 2 million-won level. SK Square, the third-largest by market cap excluding preferred shares, gained 13.77%, and fourth-ranked Samsung Electro-Mechanics rose 17.79%. On the KOSDAQ market, Alteogen surged 13.13%, while Ecopro BM (4.82%), Ecopro (2.19%), and Rainbow Robotics (1.80%) all advanced.
The previous day, the country's two main stock markets faced a "Black Monday," plunging nearly 10% and triggering a circuit breaker. On Monday, the KOSPI closed at 7,484.41, down 676.18 points, or 8.29%, from the previous trading day. A circuit breaker was also activated early in the session. A circuit breaker halts all market trading in stages, either for 20 minutes or until market close, when the index falls 8%, 15%, or 20% or more from the previous trading day and the move persists for one minute. The circuit breaker was also applied to the KOSDAQ market, which fell more than 9%.
Volatility in domestic stocks has been widening recently. The KOSPI closed at 8,801.49 on the 2nd of this month, nearing a break above the 9,000 level, but then declined for three consecutive trading days starting on the 4th. The KOSDAQ fell sharply on the 5th and the 8th in succession. "The shock of the two-day plunge was so significant that the phase of expanded volatility could continue this week," said Han Ji-young, an analyst at Kiwoom Securities.
