As the stock market has shown a roller-coaster pattern in June, volatility in individual stocks has also become extreme. In particular, the number of times the domestic market's volatility interruption (VI) mechanism was triggered has surpassed March, when the U.S.-Iran war broke out.
According to the Korea Exchange (KRX) on the 23rd, a total of 13,341 static and dynamic VIs were triggered in the KOSPI, KOSDAQ, and KONEX markets in June (1st–22nd). That is about a 21% increase from the previous month (10,997) and more than triple the same month a year earlier.
It has already surpassed the number of VI triggers in March (11,965), when financial market volatility expanded due to the war between the United States and Iran. As a result, June's VI triggers set a new monthly high for the year.
VI is a mechanism that conducts single-price auctions for two minutes when an individual stock's price surges or plunges in a short time, designed to reduce market volatility. A static VI is triggered when the price deviates beyond a certain level from the reference price, and a dynamic VI is triggered when an order is received at a price exceeding the permitted range relative to the last transaction price.
As the KOSPI has repeatedly swung sharply since June amid Middle East geopolitical risks and uncertainty over U.S. interest rates, buy and sell sidecars—the market volatility mitigation mechanisms—were triggered one after another, and volatility in individual stocks also appears to have expanded significantly.
In the KOSPI market this year, sidecars were triggered 27 times, surpassing the 2008 financial crisis period (26), and in the KOSDAQ market, they were triggered 15 times, approaching 2008 (19).
In particular, a large share of this month's VIs occurred in the KOSDAQ market. About 80% of all triggers came from KOSDAQ stocks. By stock, NUON (59 times), Copus Korea (58), and DUOBACK (47) were among the highest. In the main board, PaperCorea (51), Iljeong Industrial (44), and T'way Holdings (36) saw frequent VI triggers.
A securities industry official said, "As volatility across the market expanded due to the KOSPI's sharp swings, price volatility in KOSDAQ stocks also grew," adding, "In particular, VI triggers appear to have increased mainly among stocks with low liquidity or those viewed as mergers and acquisitions (M&A) candidates."