Why did the South Korean stock market slump significantly on Monday?

The market slumped due to growing worries over the artificial intelligence boom that previously drove the rally, coupled with potential shifts in US policy.

What is the Kospi 200 Volatility Index (VKOSPI) and why is it significant?

The VKOSPI is a gauge of option prices on the Kospi 200 Index, and it surged to a record high relative to the US Cboe Volatility Index, indicating heightened market uncertainty in South Korea.

Are investors advised to enter new positions in the Korean stock market now?

Analysts suggest a cautious approach, recommending waiting to confirm a market rebound before entering new positions, although some see the pullback as a buy-the-dip opportunity.

Home / Business and Economy / Korean Stocks Tumble, Volatility Spikes to Record Highs

Korean Stocks Tumble, Volatility Spikes to Record Highs

3 Feb

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Summary

South Korean stock market experienced its sharpest fall since April.
The Kospi 200 Volatility Index reached a record high against its US counterpart.
Investor caution grew due to AI trade concerns and potential US policy shifts.

Korean Stocks Tumble, Volatility Spikes to Record Highs

South Korea's stock market experienced a substantial downturn on Monday, marking its steepest decline since April. This volatility surge is particularly evident in the Kospi 200 Volatility Index (VKOSPI), which reached unprecedented levels compared to the US Cboe Volatility Index.

The recent pullback follows a formidable rally where the benchmark Kospi index more than doubled from a low last April. Investors, who had been hedging and positioning for further gains, are now expressing increased caution.

Growing concerns over the artificial intelligence trade, which previously boosted major companies like Samsung Electronics Co. and SK Hynix Inc., contributed to the selloff. Shares of these chip giants saw significant drops. Additionally, uncertainty surrounding potential changes in US Federal Reserve policy added to market jitters.