KOSPI Expected to Open Lower... "Volatility to Increase on 'Buy the Dip'" [Good Morning Market]

There is analysis suggesting that the KOSPI is expected to open lower due to pressures originating from the United States, such as deteriorating U.S. inflation indicators. However, with buying demand emerging after a short-term sharp decline, volatility is expected to increase.

As the KOSPI index hovers just below the 8000 mark and takes a breather, on the 12th, an employee is monitoring the stock market and exchange rates in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. On that day, the KOSPI opened at 7,953.41, up 1.68% from the previous trading day. May 12, 2026 Photo by Jo Yongjun

On May 12 (local time), U.S. stock markets showed mixed results amid external uncertainty. At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 49,760.56, up 56.09 points (0.11%) from the previous trading day. The tech-heavy Nasdaq index fell by 185.92 points (0.71%) to close at 26,088.20, while the S&P 500 index, which is focused on large-cap stocks, ended the session at 7,400.96, down 11.88 points (0.16%) from the prior day.

Concerns over inflation are mounting. As prospects for a peace agreement between the United States and Iran have weakened, oil prices have surged. On the New York Mercantile Exchange, June delivery West Texas Intermediate (WTI) crude oil futures settled back above $100, closing at $102.18 per barrel.

Inflation indicators were also higher than expected. In the U.S., both the April Consumer Price Index (CPI) growth rate and the core CPI growth rate came in at 3.8% and 2.8%, respectively, each exceeding forecasts by 0.1 percentage points. As a result, the yield on the U.S. 10-year Treasury rose above 4.46%, which increased selling pressure for profit-taking on surging semiconductor stocks and others.

Today, the KOSPI is expected to open lower due to U.S.-related pressures such as inflation concerns. However, with "buy the dip" demand arising during the session following the recent sharp decline, the decline is expected to be limited.

The previous day, the KOSPI experienced significant daily volatility, rising as much as 2% during the session before falling by 5%. The VKOSPI, the volatility index for the KOSPI 200, also reached 70.1 points the previous day, the highest level since the stock market crash triggered by the U.S.-Iran war. Since 2010, the average VKOSPI has been around 17 to 18 points.

Currently, the Korean stock market is exhibiting greater volatility than the U.S. market. The VIX, the volatility index for the S&P 500 in the U.S., remains in the low 20-point range, reflecting volatility levels typical for the period. In the Korean market, factors such as high concentration in a few sectors like semiconductors and the spread of FOMO (fear of missing out) are having a greater impact.

This volatile market trend is likely to persist for the time being. When converted into daily volatility, a VKOSPI in the 70-point range corresponds to a daily price fluctuation rate of around ±4%. Given that the average VKOSPI this year has been in the 50-point range, the Korean stock market is experiencing unprecedented levels of volatility.

Han Ji-young, a researcher at Kiwoom Securities, stated, "An increase in volatility does not necessarily mean weaker stock prices. There can also be upward volatility in prices, and currently, fundamental drivers such as earnings and valuations remain intact. Therefore, we recommend maintaining a strategy of increasing exposure to stocks, particularly those in the AI value chain such as semiconductors."

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