Domestic Stocks Ride a Roller Coaster as SpaceX Listing Adds to Volatility

[Financial News] South Korea's stock market is showing extreme volatility ahead of the listing of SpaceX, the largest Initial Public Offering (IPO) in history. As SpaceX is expected to become a "black hole" that draws in global investment funds, concerns are growing that capital outflows from the domestic market could intensify.
According to the Korea Exchange (KRX) on the 9th, the KOSPI (Korea Composite Stock Price Index) closed at 8,096.93, up 612.52 points, or 8.18%, from the previous session, reclaiming the 8,000 level. The KOSDAQ ended the session at 967.81, up 56.42 points, or 6.19%, from the previous day. The previous day, the KOSPI and KOSDAQ had plunged 8.29% and 9.08%, respectively, but they rebounded sharply within a day, swinging from one extreme to the other.
Early in the session, both the KOSPI and KOSDAQ surged, briefly triggering a Temporary Suspension of Program Buy Order Quotes, or a buy-side sidecar. When a sidecar is triggered, program buy order quotes are suspended for five minutes. On the KOSPI, the sidecar is activated when KOSPI 200 Futures rise by at least 5% from the previous session and stay there for one minute. On the KOSDAQ, it is triggered when KOSDAQ 150 Futures rise by at least 6% and the KOSDAQ 150 Index rises by at least 3%, with both conditions sustained for one minute.
The day before, both the KOSPI and KOSDAQ markets saw repeated activations of the circuit breaker mechanism and sell-side sidecars. The circuit breaker mechanism temporarily halts trading in all stocks when the KOSPI or KOSDAQ falls by more than 8% from the previous session and remains at that level for one minute.
Although the KOSPI rebounded strongly just one day after its sharp drop, market anxiety appears to be deepening. On this day, the KOSPI 200 Volatility Index, known as Korea's fear gauge, closed at 91.23, up 19.05% from the previous session. It was the first time the index had reached the 90s. The KOSPI 200 Volatility Index measures expected market volatility reflected in options prices, and readings above 50 are generally seen as an extreme fear zone.
Brokerage analysts said the SpaceX listing has added to volatility amid concerns over interest rate hikes and caution over reduced artificial intelligence investment. They noted that, as the largest IPO ever, global investors appear to be taking profits in leading domestic stocks to raise funds.
Kim Jong-min, a researcher at Samsung Securities, said, "Because the SpaceX listing is the largest mega IPO in history, it could act as a short-term disruption to supply and demand in the domestic market." He added, "Until the end of this month, a pause in leading domestic sectors and wider index volatility will be unavoidable in the liquidity black hole period."
Dongchan Yeom, a researcher at Korea Investment & Securities, said, "If SpaceX is included early in the Morgan Stanley Capital International (MSCI) Index, there will also be mechanical selling pressure on Samsung Electronics and SK hynix." He added, "However, the scale of selling is unlikely to be large because the initial free float is low."
More giant IPOs are also expected in the second half of the year, including Anthropic and OpenAI. Given that the combined valuation of Anthropic and OpenAI is in the 2,000 trillion won range, similar to SpaceX, their IPOs are also expected to have a major impact on the market.
jisseo@fnnews.com Seominji Reporter