South Korea's stock market opened with extreme volatility on Tuesday, swinging between euphoria and despair within minutes, as the "Jensen Huang effect" and fresh record highs on Wall Street fueled an early surge. The KOSPI broke above 8,900 just five minutes after the opening bell, putting the 9,000 mark within sight, but a wave of heavy foreign selling sent the index tumbling to the 8,500 level before it recovered.
The KOSPI opened 94.81 points, or 1.08%, higher at 8,883.19 on Tuesday. Buying flooded in immediately after the open, briefly pushing the index past 8,900, but profit-taking quickly followed. The index plunged to 8,503.48 by 9:09 a.m., just nine minutes into the session. Bargain-hunting by retail investors then helped the index recover to the 8,700 range, where it was trading in tight battle near 0.27% below the previous close as of 9:15 a.m. The KOSDAQ opened down 5.14 points, or 0.49%, at 1,044.89, extending its decline.
Individual stocks also experienced unprecedented swings. LG Electronics, which had hit the daily upper limit for two consecutive sessions, drew strong buying interest at the open and surged from 15th to within the top 10 by market capitalization. However, heavy profit-taking quickly cooled the rally, and as of 9:15 a.m. the stock was up just 0.39% at 382,000 won, with its market cap ranking sliding back to 15th. Bellwether Samsung Electronics traded 3.87% higher at 362,500 won, supporting the index, while SK hynix (-1.40%), Hyundai Motor (-3.07%), and Samsung Electro-Mechanics (-9.13%) all turned lower, reflecting the murky tone of early trading.
Industry observers suggest the unusual early volatility may reflect the growing impact of single-stock leveraged exchange-traded funds (ETFs), which were recently introduced to the Korean market. With supply and demand increasingly concentrated in specific stocks tied to expectations around Nvidia CEO Jensen Huang's visit to Korea, leveraged products are amplifying both index and individual stock movements, analysts said.
Foreigners drove the early turbulence. In the KOSPI market, individual investors were net buyers of 754.2 billion won and institutions net buyers of 94.7 billion won, while foreigners net sold 847 billion won, putting strong downward pressure on the index. Market experts advise investors to treat heightened volatility as a given for the time being. "In a phase where narrative rather than earnings or macro factors drives prices, volatility is bound to be maximized," said Han Ji-young, an analyst at Kiwoom Securities. "Investors should watch for increased volatility in leading stocks due to short-term fatigue, and diversify risk through a 'barbell strategy' by gradually buying earnings-driven large caps that have been thoroughly overlooked despite improving profit momentum."
