I can't remember a time when the national stock market of a large, developed country traded like this. The Kospi rose 12% at the open today and is still up 11.4%. That's after an 11% decline yesterday.
If this were a time of covid or there was a war in the Korean peninsula, these moves would be understandable but the war is 6500 kilometers away and the effects are only tangential via energy prices.
What's clear is that a mania swept over Korean stocks after years of ultra-depressed multiples. The gains were kicked off by memory stocks and the broader market taking a closer look at Samsung technology. That spread as local traders started trading with leverage and led to gigantic gains last year. Even if the index is cut in half, it still has healthy gains over the past year.
In terms of today's price action, there is a huge rush to buy the dip and an impressive bounce. That puts Korea once again among the year-to-date gainers in global indexes.
The volatility is unhealthy though and it suggests unhinged money swashing around in a market that should be much better behaved. For the moment, we can only watch in awe.
