This year, the volatility of the domestic stock market has surged, with the number of volatility interruption device (VI) activations already exceeding last year's total. The KOSPI has been experiencing sharp fluctuations, rising and falling by 5-10% in a single day, leading to a significant increase in VI activations that temporarily halt trading of individual stocks.
According to the Korea Exchange, as of July 16, the total number of VI activations in the KOSPI and KOSDAQ markets reached 76,112 this year, surpassing last year's total of 55,875 by 20,237 activations, or 36.2%. This year's VI activations are on track to set a new record. June recorded the highest monthly total with 21,257 activations, followed by March with 11,965, May with 10,997, July (up to the 16th) with 10,363, April with 8,220, January with 6,902, and February with 6,408. Notably, July has already exceeded 10,000 activations in just 12 trading days.
The surge in VI activations is attributed to the unusual volatility in the stock market this year. The KOSPI has seen daily fluctuations exceeding 5% on 28 occasions. Recently, volatility has intensified, with significant daily movements recorded this month: on the 2nd (-7.89%), 3rd (5.76%), 7th (-4.91%), 8th (-5.35%), 10th (2.52%), 13th (-8.95%), 15th (6.24%), and 16th (-6.37%), resulting in hundreds of points of movement in a single day.
The VI is a mechanism that switches to single-price trading for two minutes when the price of an individual stock rises or falls beyond a certain threshold in a short period, helping to mitigate excessive price fluctuations. As market volatility increases, the number of activations tends to rise as well. Analysts believe that the sharp price movements in individual stocks are linked to the volatility of large-cap stocks in the semiconductor and artificial intelligence (AI) sectors, increased leveraged investments, and shifts in investor sentiment.
The KOSDAQ has also shown significant volatility, with VI activations totaling 61,403 this year, accounting for 80.7% of the total. Last year, the KOSDAQ recorded 43,943 activations, while the KOSPI had 11,932, indicating that KOSDAQ VI activations were approximately 3.7 times higher than those of the KOSPI. The KOSDAQ's higher proportion of small- and mid-cap growth stocks makes it more sensitive to changes in investor sentiment, resulting in a greater number of VI activations compared to the KOSPI.
Shinhan Investment Corp. noted, "Investor sentiment is being dampened by concerns over semiconductor earnings peaks, tightening measures, and geopolitical risks, leading to increased market volatility." They added, "Next week, it will be important to assess the recent geopolitical risks and inflation at the European Central Bank's monetary policy meeting, as well as to gauge the pace of AI investments and the resulting semiconductor demand through the earnings reports of major U.S. tech companies."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.