The domestic stock market has experienced significant fluctuations due to U.S. President Donald Trump's indecisiveness, resulting in the KOSPI index's volatility reaching the highest level in over four years. Investors' confusion is also growing.
According to the Korea Exchange on the 13th, the daily fluctuation rate of the KOSPI index this month (1st to 11th) averaged 1.97%. This value, which is the difference between the day's high and low divided by the index average, increases as the index moves significantly. This is the highest level in four years and two months since February 2021 (2.03%) on a monthly basis.
The daily fluctuation rate of the KOSPI index, which was at 1.15% in January last year, increased to 1.61% due to the impact of 'Black Monday' when the stock market plummeted over concerns of a U.S. recession in August. It then stabilized, dropping to 1.02% in February of this year. However, after President Trump announced higher-than-expected reciprocal tariffs this month, the domestic stock market also saw increased volatility.
On the 7th of this month, the KOSPI index fell sharply by 5.57%. Concerns grew that the reciprocal tariffs announced by the Trump administration would lead to a significant global economic downturn, causing global asset prices to plummet simultaneously. This was the largest drop since 'Black Monday' on August 5th last year.
Subsequently, the KOSPI index surged by 6.6% on the 10th after President Trump announced a 90-day postponement of reciprocal tariffs on countries other than China.
The 'KOSPI 200 Volatility Index (VKOSPI),' known as the Korean fear index, also experienced sharp fluctuations. VKOSPI is an index that measures expected future volatility in the market, reflected in option prices, and it increases when the KOSPI index declines sharply.
On the 7th, when the KOSPI dropped by over 5%, VKOSPI surged by 65% compared to the previous day, reaching a record high of 44.23 since last August's 'Black Monday.' However, the next day, it fell by 14% to 37.83. On the 9th, it surged by 8% to reclaim the 40 level, but the following day it dropped by 31% to settle at 28.20.