"I’ll Buy Samsung Electronics and SK hynix on My Way to Work" Warning Issued Over Overheated Pre-Market Session

As the stock market has surged, pre-market session trading by retail investors commuting to work has jumped sharply. The number of volatility interruption mechanism (VI) triggers, which are activated when share prices move abruptly, has also risen steeply.
According to Nextrade on the 13th, average daily trading value in the pre-market session from the 4th to the 12th of this month came to 1.0239 trillion won. That is the highest monthly daily average so far this year. In December last year, the average was only 146.3 billion won, but it has grown nearly tenfold in just five months. It also surpassed the 627.99 billion won daily average recorded in March, when volatility spiked because of the war in the Middle East.
Trading in the pre-market session has risen especially sharply in large-cap stocks.
Samsung Electronics, the company with the largest market capitalization, saw its average daily pre-market trading value nearly double from 119.36 billion won in April to 221.31 billion won in May. SK hynix's average daily pre-market trading value also tripled, rising from 87.9 billion won in April to 203.75 billion won in May. The pre-market session is typically used by investors who want to respond quickly to global developments, including moves in U.S. markets, before the regular market opens at 9 a.m. As the domestic market has surged by nearly 2,000 points, from the 5,000 level to the 7,000 level, over the past month, demand for off-hours trading has increased as large-cap stocks such as Samsung Electronics and SK hynix, which led the rally, have become highly sensitive to global fund flows and trends in U.S. equities.
As commuting-time investment has grown, VI activations have also surged. Last year, an average of about 200 VIs were triggered each month in the pre-market session. In December alone, there were just 186 cases. But this year, the number has risen rapidly, with 429 in January, 540 in February, 1,545 in March, and 588 in April. So far this month, through the 12th, there have already been 170 activations.
At present, Nextrade is using only dynamic VI to curb volatility when price swings widen. Dynamic VI is triggered when KOSPI 200 Index stocks move 3% or more from the previous execution price, and other stocks move 6% or more. Trading is then halted for two minutes.
Because the pre-market session operates on an order-matching basis, where trades are executed immediately when matching orders appear, concerns have been raised that even a small number of orders could lead to sudden imbalances or losses if an order is entered by mistake.
On the 22nd of last month, Samsung SDI opened in the pre-market session at 820,000 won, up 27.13% from the previous day's closing price of 645,000 won, and trading was temporarily halted after VI was triggered. After trading resumed, the stock plunged and fell back to the 660,000-won range. It later closed at 659,000 won during regular trading that day.
In response, Nextrade plans to introduce Static Volatility Interruption in September as a supplement. Static VI will be triggered if a stock price moves more than 10% from the previous day's close, and when activated, single-price trading will apply for two minutes. Single-price trading means collecting investor orders and executing them all at once at a single price.
"As the stock market boom draws in more investors, the size of pre-market session trading is bound to keep growing," said an official from the financial investment industry. "Because liquidity is lower than during regular trading, even small transactions can increase price volatility, so investors should be cautious."
nodelay@fnnews.com Park Ji-yeon Reporter