KOSPI (Korea Composite Stock Price Index), sharp fluctuations amid Middle East tensions… rebounded 9.6% after a 12% plunge

Domestic stock markets experienced significant fluctuations last week, with active trading among investors. According to Korea Exchange data, as of the 5th of this month, the average daily stock turnover rate on the KOSDAQ market reached 2.38%, a 43% increase from the previous month. A high turnover rate indicates frequent trading of stocks.

The main cause of this week’s domestic market volatility was the outbreak of the US-Iran war, which triggered global instability. On the 3rd, the KOSDAQ index plummeted 9.6%, and the next day continued to fall by 12%, marking the largest decline in history. However, on the 5th, it rebounded strongly by 9.6%, the biggest single-day gain since the 2008 financial crisis.

Meanwhile, an increase in short-term arbitrage trading led to a sharp rise in the turnover rates of some individual stocks. Due to tensions in Middle Eastern geopolitics, oil and natural gas-related stocks surged in price, with refining and gas stocks topping the turnover rate charts. For example, Xingguo Petroleum’s turnover rate reached 471%, and Korea’s ANKOR Oilfield was at 345%.

Iran’s announcement of blocking the Strait of Hormuz has raised concerns about disruptions in energy transportation, leading to active trading in related shipping and military stocks. Investors also expanded leverage and inverse product trading in response to market volatility. KODEX leveraged ETFs saw a 66% increase in trading volume compared to the previous month, while inverse ETFs surged by as much as 175%.

Looking ahead, amid ongoing instability in the Middle East, market volatility may continue. Experts warn that attempting to invest with borrowed funds in such a high-volatility environment could face significant losses. This market turbulence presents both opportunities and risks for many investors, requiring cautious management.