Trading volume on South Korean stock exchanges has doubled in two months as the KOSPI nears the 9,000 mark, fueling concerns about market overheating. The surge is attributed to an influx of retail capital amid increasingly volatile sessions in which the index has swung by hundreds of points.
According to the Korea Exchange (KRX) on Tuesday, trading turnover on the main bourse reached 86.57 trillion won on Monday, while the alternative trading system (ATS) Nextrade recorded 67.18 trillion won, bringing the combined total to 153.75 trillion won. The figure is roughly 45% higher than last month's combined daily average of 106.18 trillion won across the KRX and Nextrade. Considering that the combined daily average across the two exchanges stood at just 68.38 trillion won in April, trading volume has more than doubled in two months.
Looking at the exchanges individually, KRX trading turnover surpassed 90 trillion won for the first time on June 29. In January, when the KOSPI first broke through the 5,000 level, daily turnover stood at just 41.94 trillion won — less than half of the recent figure. The increase is interpreted as the result of additional buying by retail investors gripped by FOMO (fear of missing out) after the index entered the 7,000 range, shrugging off the impact of the Middle East war.
Nextrade also surpassed 60 trillion won in trading volume for the first time since its launch. The previous record was 59.58 trillion won, set on March 4. Market observers point to growing investor enthusiasm in the pre-market and after-market sessions, along with increased trading concentrated on large-cap stocks, as drivers of the turnover surge.
However, retail investors account for more than 80% of trading on Nextrade, while foreign and institutional investor participation remains low — often producing trading patterns that diverge from those seen during regular KRX sessions. On Tuesday, Nextrade's pre-market session rose 1.15%, but the KOSPI's regular session, after gaining early in the day, swung sharply and closed up only 0.15%. "Investors who buy in the pre-market often suffer significant losses," an industry official said.
The financial investment industry expects trading volume to continue rising for the time being on the back of the bullish market. Higher trading volume is projected to benefit not only the exchanges but also brokerage firms' earnings, through increased commission revenue from brokerage services and growth in margin loans.
Still, some point out that market volatility is increasing as trading volume rises sharply amid a retail-driven market. Foreign investors have posted net selling for 18 consecutive trading days from June 7 through Tuesday, with retail investors essentially holding up the market on their own. Foreign investors net sold 6.56 trillion won worth of KOSPI shares on Tuesday, marking the third-largest selling spree on record. Meanwhile, institutional investors recorded only 249.2 billion won in net purchases, while retail investors net bought 6.29 trillion won, supporting the index's downside.
The KOSPI closed at 8,801.49 on Tuesday, up 13.11 points or 0.15% from the previous trading day, marking a fresh all-time high. The index briefly soared to 8,933.62 in early trading, putting it within reach of the 9,000 threshold, but reversed sharply as profit-taking flooded the market. At one point during the session, the index plunged to 8,503.12 — a swing of 430.5 points from the day's high — in a roller-coaster session.
Market participants attributed the volatility to a combination of factors, including fatigue from the recent rapid rally, psychological pressure surrounding the 9,000 level, concentration in large-cap semiconductor stocks, and the growing prevalence of single-stock leveraged products. "The fact that foreign investors sold more than 2 trillion won within the first 15 minutes of trading appears to reflect the influence of algorithmic trading," said Kim Tae-hong, CEO of Growth Hill Asset Management.
