Fear Index Hits 'Lowest' After Resumption of Gongmaedo Trading

On the first day of the partial resumption of short selling on the 3rd, the KOSPI index is displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] Since the resumption of short selling, the KOSPI200 Volatility Index (V-KOSPI), known as the 'fear index,' has fallen to its lowest level of the year.

According to the financial investment industry on the 7th, the V-KOSPI, a contrarian indicator that rises during stock market downturns, recorded closing prices of 16.89 on the 6th and 17.00 on the 7th. This represents a 10.3% decline compared to the end of April and a 15.9% drop compared to the end of last year.

Although there were significant concerns about price declines following the resumption of short selling on KOSPI200 stocks, the actual volatility of KOSPI200 has rather decreased. Jun Kyun Jeon, a researcher at Samsung Securities Research Center, stated, "As caution against downside risk has diminished, the implied volatility in the options market has stabilized downward."

However, the impact of short selling on individual stocks continues. On the 6th, the Korea Exchange selected 10 stocks experiencing overheating due to short selling, among which Samsung Heavy Industries plunged as much as 16% intraday due to an earnings shock and the effects of short selling.

On the first day of the partial resumption of short selling on the 3rd, the KOSPI index is displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mun Ho-nam munonam@

Unlike KOSPI200, the KOSDAQ150, where short selling is permitted, is showing increasing effects from short selling. Since the resumption of short selling on the 3rd, the KOSDAQ150 has fallen by 9.1%. Among the 30 stocks experiencing short selling overheating, 25 belong to the KOSDAQ.

Yujun Choi, a researcher at Shinhan Financial Investment Research Center, said, "The noise from the deterioration of investor sentiment due to the resumption of short selling has been fully reflected." He added, "Assuming the balance ratio increases to the level before the short selling ban, the amount that could flow into short selling is 4.1 trillion KRW," and forecasted, "By sector, 1.8 trillion KRW could flow into healthcare, 1.1 trillion KRW into IT, and 400 billion KRW into communication."

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