KOSPI surges more than 12% early, buy-side sidecar triggered in both markets

Won-dollar exchange rate falls back to the 1,460 won range

On the 5th, as risk appetite revived, the KOSPI, which had plunged for two straight sessions, opened higher.

According to the Korea Exchange, as of 9:33 a.m., the KOSPI was trading at 5,709.71, up 616.17 points (12.1%) from the previous day. The index opened at 5,250.92, up 157.38 points (3.09%).

A day earlier, the KOSPI closed at 5,093.54 after tumbling 698.37 points (12.06%) on the impact of the outbreak of war involving Iran. It marked the largest point drop and percentage fall on record, surpassing even the decline seen during the 9/11 attacks. After another 19.3% plunge over two days following the 3rd (-7.24%), the KOSPI reverted to levels seen about a month ago, stoking fear in the market.

However, with crude markets showing signs of calming on U.S. government measures to stabilize oil prices, risk appetite appears to have recovered across global equities, including in South Korea. Overnight, Wall Street’s three major indexes also ended higher.

Top market-cap names in the domestic main board market turned broadly positive. Bellwether Samsung Electronics was jumping more than 12%. SK hynix and Hyundai Motor were also surging about 14% and 13%, respectively. Among the top market-cap stocks, S-Oil—one of the few that had held up during the recent selloff—was the only one down, slipping about 3%.

The KOSDAQ was also trading at 1,091.98, up 113.54 points (11.6%). It opened at 1,023.84, up 45.4 points (4.64%) from the previous day.

Foreign investors were net buyers by 129.5 billion won. Retail investors and institutions were net sellers by 22.8 billion won and 108.0 billion won, respectively.

Top KOSDAQ market-cap names also rebounded sharply across the board. Heavyweights EcoPro and EcoPro BM were surging about 16% and 14%, respectively. Alteogen (9.64%), Samchundang Pharm (13.02%), Rainbow Robotics (13.64%), ABL Bio (11.71%), Lino Industrial (12.39%), and Kolon TissueGene (10.65%) were also posting sharp gains.

As both markets staged a steep rebound, a sidecar—an automatic temporary halt of program buy orders—was triggered shortly after the open. According to the Korea Exchange, buy orders were suspended for five minutes at 9:06:02 a.m. due to swings in KOSPI 200 futures. The mood reversed just a day after both markets saw sell-side sidecars and circuit breakers activated.

Han Ji-young, a researcher at Kiwoom Securities, said, "Considering Broadcom’s strong fourth-quarter results and the overnight rebound in U.S. equities, now is the time to buy, not sell," adding, "Today’s market is expected to mount a strong rebound, led by oversold leaders, to recoup yesterday’s plunge."

The won-dollar exchange rate also showed signs of stabilizing slightly. In the Seoul FX market, the won-dollar rate, which had briefly breached 1,500 won, opened at 1,464 won, down 12.2 won.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com