Kospi Volatility Cools, but Thin Trading Stalls Push Above 7,000

Forecast Trend Report by Period

After wild swings last month, South Korea’s Kospi has entered a calmer phase following tighter rules on single-stock leveraged products. Volatility has dropped quickly, but trading volume and value have also fallen, weakening the market support needed to sustain a move above 7,000.

Data from the Korea Exchange showed sidecars were triggered five times on the benchmark stock market from the start of August through Aug. 28. That was about one-third of the 15 cases recorded in July. It also marked a sharp easing from the combined 25 triggers in June and July, when sidecars were activated 10 times and 15 times, respectively. Circuit breakers, which were triggered four times in July, were not activated at all in August.

The index’s daily swings have narrowed as well. In July, the Kospi moved more than 3% on 14 of 22 trading days, or 64%. In August, that fell to eight of 19 sessions, or 42%. The number of days with moves of more than 5% also dropped to three from 10 over the same period.