Fear Index Fluctuates Amid Volatility Concerns in the Market

VKOSPI Market Volatility Rises to Highest Level

[Asia Economy Reporter Junho Hwang] On the 28th, the KOSPI fell by 1.71%, causing the KOSPI 200 Volatility Index (VKOSPI) to reach its highest level. This indicates that investors' psychological anxiety about the stock market has increased, and a market situation with high volatility is expected to continue.

According to the Korea Exchange on the 29th, the VKOSPI recorded 33.09 the previous day. This is the highest level in 7 trading days. The rate of increase compared to the previous day was 12.51%, the highest since the 22.17% on the 11th, when the KOSPI officially entered the 3100 level.

This means that investors' anxiety about the stock market has increased. When this index rises, many investors expect greater market movements. Therefore, it is commonly called the "fear index." Recently, as the KOSPI rose to the 3000 level and fluctuated, the index has shown an upward trend. In the case of the previous day, the KOSPI fell due to the decline in the US stock market, which steepened the rise of this index.

Investors' anxiety has increased as the KOSPI surpassed 3000 and fluctuated. The average value of this index this month is 30.5, which is more than 10 points higher than last month. Looking in detail, the volatility of large-cap stocks has increased. Samsung Securities analyzed that, based on recalculating the index for large-cap, mid-cap, and small-cap stocks over 60 days from December last year to this month using the Garman-Klass method, the daily average volatility of large-cap stocks this month was 13%, more than double the 6.2% in December last year.

Volatility for mid-cap and small-cap stocks has stagnated or decreased. This is seen as a result of increased price fluctuations in large-cap stocks due to factors such as Apple Car, foundry orders, business adjustments, and capital structure reorganization since the beginning of this year, which has heightened investors' anxiety. It is also forecasted that investors need to prepare for the increased volatility of large-cap stocks.

Yoo Jong-woo, head of the Research Center at Korea Investment & Securities, explained, "Recently, as individual investors' participation in the stock market has increased and issues affecting top market capitalization companies have emerged, this has led to concentrated supply and demand and expanded market fluctuations, stimulating the rise of VKOSPI. However, it is difficult to judge the market direction solely based on VKOSPI movements."

This content was produced with the assistance of AI translation services.