▲ The KOSPI and KOSDAQ indices are displayed on the electronic board of the dealing room at Hana Bank in Jung-gu, Seoul, on the 10th, when the KOSPI opened higher.
Just seven trading days after financial authorities implemented supplementary measures on single-stock leverage and inverse products, the Kospi 200 Volatility Index (VKOSPI), often referred to as South Korea's "fear index," plummeted by nearly 20%.
According to the Korea Exchange on the 10th, as of 1:45 PM today, the VKOSPI stood at 69.88, down 5.71 points (7.55%) from the previous session.
During the intraday session, it hit a low of 69.87.
Compared to 86.18 points on July 30, right before the financial authorities' leverage measures were introduced, the index has dropped by 16.30 points (18.91%) over the subsequent seven trading days.
It is also 23.39 points (25.08%) lower than the recent intraday peak of 93.27 points recorded on June 29.
This is the first time since May 28 that the VKOSPI—an annualized index reflecting expected volatility over the next 30 days based on Kospi 200 option prices—has fallen below the 70 threshold during intraday trading.
Having hovered in the late 20s until early this year, the VKOSPI rapidly surged as the KOSPI's upward momentum accelerated.
In particular, after the KOSPI surpassed the 8,000 milestone on a closing basis for the first time in history, the upward trend steepened further from late May, oscillating in the 80 to 90 range around mid-June when the index approached the 9,000 level.
It even spiked to an intraday high of 97.99 on June 29, breaking its highest record since the 2008 global financial crisis. Even as the KOSPI plunged nearly 40% from its previous intraday high (9,385.59 on June 19) due to a global semiconductor correction, the index continued to soar above the 80 level through the end of last month.
Analysts suggest that extreme volatility was driven by market concentration—where Samsung Electronics and SK Hynix alone account for more than half of the total market capitalization of the securities market—alongside the launch of single-stock leverage products based on those equities.
In response, financial authorities implemented supplementary measures on July 31, raising the minimum deposit requirement from 10 million won to 30 million won and revising rules so that proceeds from stock sales are recognized as deposits only after settlement is completed and cash is credited (T+2).
Single-stock leverage trading volume, which reached 12,448.5 billion won on July 30 the day before the measures took effect, sharply decreased to 845.2 billion won by the 7th of this month.
During this period, the KOSPI and KOSDAQ rose by 10.52% and 20.54%, respectively.
(Photo: Yonhap News)
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