South Korea's benchmark stock index staged a powerful recovery on Wednesday, surging more than 3% following a steep near-10% plunge the previous day, driven by robust buying from retail investors. The Korean won weakened against the US dollar, while the yield on three-year government bonds rose.
The Korea Composite Stock Price Index (KOSPI) closed up 267.18 points, or 3.26%, at 8,471.02, after earlier gaining as much as 4.55% during the session.
Samsung Electronics Co Ltd led the market higher, jumping 9.84% following a media report that the chipmaker is planning a share buyback program worth approximately 90 trillion won ($58.4 billion). Peer company SK Hynix Inc advanced 0.98%.
An analyst noted that the rebound, fueled by a surge of retail investor activity, recouped a significant portion of the losses from the prior trading session.
"The influx of retail investors into leveraged ETFs has been a primary driver of market volatility, as many, driven by 'fear of missing out' (FOMO), have been waiting for an entry opportunity," the analyst said.
"Market volatility is expected to remain elevated going forward, with Micron Technology's earnings report on the horizon and the US market awaiting inflation and employment data."
Global index provider MSCI maintained South Korea's classification as an emerging market in its annual market classification review, citing long-standing issues regarding access to the country's foreign exchange market.
Another analyst commented, "MSCI's decision had a limited impact on today's market, as the issue was already mentioned last week." He added that the previous session's downturn was a temporary correction driven by two-way high volatility.
Among the 918 traded stocks, 516 advanced while 367 declined.
Foreign investors were net sellers of Korean shares, offloading 4.6 trillion won worth of stock.
The Korean won was quoted at 1,544.5 per dollar on the onshore settlement platform, down 0.74% from the previous close of 1,533.1.
The benchmark three-year treasury bond yield rose to 3.776%, up from the previous close of 3.772%. The benchmark 10-year bond yield fell 1.3 basis points to 4.165%.
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