South Korean equities saw significant volatility on Wednesday, initially declining before swinging to gains. The Kospi index, after a sharp intraday drop, closed 1.6% higher at 5,752.61, while the junior Kosdaq index also climbed. This turnaround was largely attributed to a proposed 15% tariff deal with the U.S., which boosted investor confidence.
The early part of the session was marked by declines, with the Kospi falling by as much as 4.3% earlier in the day. This initial dip was prompted by Samsung Electronics' disappointing earnings and concerns over new regulatory curbs on single-stock leveraged ETFs. Despite the initial negative reaction, the Kospi recovered and closed higher, demonstrating resilience amidst these developments.
SK Hynix, a major chipmaker, also saw substantial activity. After plunging over 9% following its earnings report that missed analyst expectations, its stock also rebounded to close modestly higher. Samsung Electronics, another key component of the Kospi, experienced similar volatility but also ended the day in positive territory, up 1.1%.
The Financial Services Commission (FSC) announced new measures to curb volatility in the market, particularly targeting single-stock leveraged ETFs. These measures include raising the minimum deposit requirement for such products to KRW 50 million (approximately $38,000) and limiting investments to 20% of an individual's total financial assets. These regulations aim to stabilize the market after significant fluctuations. Earlier in the day, circuit breakers were triggered on both the Kospi and Kosdaq markets due to sharp drops, highlighting the extreme volatility.
