The KOSPI index, which has been on a streak of record highs, recorded its largest one-day swing in more than four years. In the short term, some expect volatile trading to continue through the Asia-Pacific Economic Cooperation (APEC) summit.
As of 11 a.m. on the 24th, the KOSPI index was moving in the 3,920 range. It rose 75.75 points (1.97%) from the previous day, setting a new record high. After first breaking above the 3,500 level on the 2nd of this month, the KOSPI index subsequently crossed 3,600 on the 10th, 3,700 on the 16th, and 3,800 on the 20th.
The index keeps rising, but the mood is flipping sharply even within a day. From the 1st to the 23rd of this month, the average gap between the KOSPI index's daily high and low was 71.27 points. Given that this year's annual average gap is 36.03 points, the amplitude is roughly twice as large.
For example, on the 14th, the KOSPI index's high was 3,646.77 and the low was 3,535.52. That means the index moved within 111 points in a single day. It was the largest one-day swing since "Black Monday," which occurred on Aug. 5 last year when yen carry trades were unwound. As China announced restrictions on rare earth exports and U.S.-China trade tensions reignited, profit-taking poured in.
The KOSPI index also whipsawed the previous day. It opened weaker, broke above the 3,900 level for the first time ever, then turned lower in the afternoon. The gap between the day's high and low was 79.9 points.
Even with a broader view, the trend of heightened index volatility is clear. This month's average gap between the KOSPI index's daily high and low is the largest since January 2021 at 80.67 points. Back then, the KOSPI index broke above 3,000 for the first time on a semiconductor rally, and the market ran hot amid the second "Donghak retail investor movement."
A domestic securities firm market analyst said, "Because the KOSPI index has risen quickly and faces valuation burdens, it is reacting more sensitively to positives and negatives," adding, "Rather than taking on excessive leverage (borrowing fund) or chasing the rally, investors should consider using short-term pullbacks as opportunities."
There are several upcoming events that could further widen daily swings. First, the September consumer price index (CPI), whose release was delayed by the U.S. federal government shutdown, will be published late tonight Korea time. It is the inflation print that comes right before the October Federal Open Market Committee (FOMC) meeting.
Markets expect the month-over-month September CPI increase and the core CPI, which excludes volatile food and energy prices, at 0.4% and 0.3%, respectively. Global investment banks (IBs) said that if core CPI tops 0.35%, it would be a drag on stocks, while a reading below 0.25% would be a positive.
Earnings releases for top market-cap corporations for the third quarter (July–September) will also continue. On the 29th, SK hynix will release results, followed by Samsung Electronics unveiling detailed results the next day.
Developments in follow-up U.S.-Korea trade talks and U.S.-China trade negotiations up to the APEC summit to be held in Gyeongju at the end of this month could also widen market swings.
Na Jeong-hwan, a NH Investment & Securities analyst, said, "With uncertainty lingering over U.S.-Korea tariff talks, the key is whether U.S. President Donald Trump will accept Korea's partitioning investment proposal for the United States," adding, "It may face difficulties and be delayed, but ultimately it will proceed in the direction the United States wants."