After a plunge that triggered circuit breakers for two straight days on the stock market and KOSDAQ, the KOSPI index soared more than 17% on the 31st. As the roller-coaster trading continued, the market set a bizarre record in July alone with 23 sidecars and six circuit breakers.
The KOSPI index closed at 6,595.45, up 17.91% (1,001.89 points) from the previous trading day. The KOSDAQ index also rose 11.63% to end the session at 719.76.
The surge in the KOSPI is attributed to a rebound in U.S. semiconductor stocks. Overnight, Microsoft (MS) and Amazon reported cloud results that beat market expectations, spreading optimism that big tech's investments in artificial intelligence (AI) data centers are translating into real revenue growth.
As the market opened with a surge, buy sidecars were triggered simultaneously on the stock market and the KOSDAQ six minutes after the open. This brought the total number of sidecars this year to 72. Of these, 27 were triggered in July. About 37% of all sidecars were activated this month.
In particular, as sharp declines and spikes in the indexes alternated, a strange phenomenon intensified in which buy and sell sidecars appeared every other day in turn.
On the 2nd, when the KOSPI index fell more than 7% and sell sidecars were triggered on both markets, the very next day on the 3rd the index rebounded more than 5% and a buy sidecar was activated on the stock market.
On the 13th, the KOSPI tumbled nearly 9%, leading to sell sidecars followed by circuit breakers, and on the 14th a sell sidecar was triggered on the KOSDAQ. But on the 15th, as the view spread that the drop had been excessive, both markets surged and buy sidecars were activated, and on the following day, the 16th, sell sidecars were triggered again.
In particular, volatility was even more extreme this week, which saw repeated historic plunges and spikes. On the 28th and 29th, sell sidecars and circuit breakers were triggered on both markets for two consecutive days, and two trading days later, buy sidecars were activated on both markets.
Experts warn that the current market is extremely risky for retail investors to enter.
Lee Sang-heon, Director General of iM Securities' research center, said, "In a market with such high volatility, you can't help but be skeptical about the potential for gains to continue," adding, "In the short term, this may be a bottoming signal, but it's hard to judge that a sustained rise is likely, so we should watch the market first."
There are especially warnings to be cautious with investments using loans, margin, and single-stock leveraged exchange-traded funds (ETFs).
Lee Jin-woo, head of Meritz Securities' research center, said, "Today's market volatility is the kind you can't time, and the swings themselves are becoming unusually large," adding, "Retail investors should check whether the purpose and size of their investment funds are within what they can handle and operate within a range they can control."