On the 6th, the KOSPI was shaky enough for a sell-sidecar to be triggered, but on the 9th it rebounded by more than 4% thanks to a recovery in semiconductor investment sentiment. The pattern is one day soaring and the next day plunging. While the index is defending the ‘5,000 level,’ rising volatility is leaving investors confused. Brokerages projected that market volatility will remain high for the time being due to variables such as Japanese government bond yields.

The KOSPI finished at 5,298.04, up 208.90 points (4.1%) from the previous session. The KOSDAQ also ended at 1,127.55, up 46.78 points (4.33%), as the domestic market rebounded more than 4% across the board.

On the main board, institutions led the index with net purchases of 2.7123 trillion KRW. Foreign investors, who dumped 11 trillion KRW last week, turned net buyers for the first time in four sessions with 441.6 billion KRW in net purchases. In contrast, retail investors, who bought more than 6 trillion KRW last week, moved to take profits with 3.2980 trillion KRW in net sales today. This was the largest-ever net selling by retail investors on the KOSPI.

After the lower house election, the Japanese stock market rose 4%, and semiconductor investment sentiment, led by the United States, also recovered, sending the index sharply higher. On the back of this, large-cap AI-related stocks such as Samsung Electronics (4.92%), SK Hynix (5.72%), and SK Square (9.53%) all strengthened.

Recently, the KOSPI has been volatile ‘enough to cause motion sickness.’ The average daily move of the index this month was 3.85%. It swung more than in November last year (1.82%), when debate over an AI bubble flared, and even more than in March 2020 (3.32%), when the COVID-19 shock was severe. On four of the six trading days this month, the index moved more than 3% on a closing basis, and the sidecar that halts program trading was triggered three times.

The KOSPI 200 Volatility Index (VKOSPI), known as the ‘K-Fear Index,’ has also stayed above 40 points throughout this month.

The reason the KOSPI is swinging widely is that, ‘after such a big run-up,’ investor sentiment is easily swayed when variables emerge.

Kim Hak-gyun, head of research at Shinyoung Securities, said, “When stocks rise a lot, those holding them want to take profits, while those who could not buy feel relatively deprived, so volatility increases when stocks hit new highs or new lows,” and added, “Volatility appears elevated because the index has risen without a correction.”

In fact, this month, when the index plunged, retail investors stepped in to buy more than 2 trillion KRW, absorbing foreign supply, and when the index surged, as on this day, they quickly took profits by selling 1 to 3 trillion KRW.

With variables such as the impact of Japan’s election results in play, some expect the volatile market to continue for the time being. Seo Sang-young, a researcher at Mirae Asset Securities, said, “Following the result of this (Japanese) election, the market is watching for the possibility that a jump in Japanese government bond yields could lead to a jump in US Treasury yields,” adding, “In that case, it could weigh on the stock market and act as a factor increasing volatility.”