As the domestic stock market plummeted today (July 28), the Kospi 200 Volatility Index (VKOSPI), often referred to as South Korea's "fear index," rebounded for the first time in seven trading sessions, surpassing the 80 mark.

According to the Korea Exchange, the VKOSPI closed up 7.58% from the previous session at 83.43.

During the intraday session, it briefly spiked to 83.65.

The VKOSPI measures expected future market volatility reflected in option prices. Because it tends to surge when the Kospi plunges, it is also known as the "fear index."

Previously, the VKOSPI spiked to an intraday high of 83.58 on March 5, immediately following the outbreak of the war in Iran, before stabilizing for a while and dropping to an intraday low of 46.54 on April 14.

However, it subsequently turned upward, surpassing the 90 mark on the 9th of last month and peaking at 97.99 on the 29th of the same month, marking its highest level since the global financial crisis.

It then turned downward again, extending a six-session losing streak from the 21st until the previous day.

Driven by this downward trend, it slipped below the 80 mark on the 24th and hovered in the 70s before returning to an upward trajectory today.

The downturn appears to have been influenced by a broad slide in the domestic stock market as major semiconductor stocks faltered.

Today, the Kospi plummeted 10.84% from the previous session to close at 6,023.66, while the Kosdaq index dropped 7.72% to finish at 705.85.

Amid the market slump, sidecars—temporary suspensions of program sell orders—were successively triggered on both the Kospi and Kosdaq markets this morning.

Circuit breakers, which temporarily halt trading across both the Kospi and Kosdaq markets, were also triggered.

The sell-off was fueled by weakness in semiconductor stocks overnight on Wall Street.

Concerns over intensifying global competition spread after reports surfaced that China has begun developing deep ultraviolet (DUV) lithography equipment used in semiconductor manufacturing, causing the Philadelphia Semiconductor Index to fall by 2.23%.

SK Hynix's American Depositary Receipts (ADRs) also tumbled 7.47%.

Samsung Electronics plunged 13.39% today to fall back into the 220,000-won range, while SK Hynix slumped 14.65% down to 1.55 million won.

Notably, Samsung Electronics recorded its fourth-largest decline on record, while SK Hynix saw its second-largest drop so far this year.

However, experts view today's sharp decline as excessive relative to fundamentals.

Han Ji-young, an analyst at Kiom Securities, noted, "In the process of undergoing consecutive corrections, the stock market's own immunity has weakened, and as stock prices fall, there is a psychological tendency to seek out only negative news."

She explained, "The current plunge is largely overdone," adding, "There is still no realistic deterioration in fundamentals such as corporate earnings, and technical indicators like valuations and the Relative Strength Index (RSI) all point to oversold conditions."

Kim Dong-won, head of research at KB Securities, also projected, "Next year will be a period of the most severe supply shortages in semiconductor history. Fundamentals in the memory sector remain solid. Considering this, excessive concerns over the memory industry cycle will quickly dissipate."

He emphasized, "Given that valuation burdens for Samsung Electronics and SK Hynix have eased due to the recent stock price declines, the current timing presents an opportune moment to buy."

Meanwhile, expectations are rising that upcoming earnings announcements from major semiconductor companies, starting tomorrow, could serve as a catalyst for a rebound.

SK Hynix is scheduled to release its second-quarter earnings tomorrow (July 29), followed by Samsung Electronics finalizing its second-quarter results the day after tomorrow (July 30).

In addition, major U.S. big tech companies including Meta, Microsoft, Amazon, and Apple are slated to announce their second-quarter earnings this week.

Analyst Han Ji-young predicted, "We can seek a turnaround in sentiment through the earnings reports of market leaders scheduled starting tomorrow."

(Photo: Yonhap News)