Seoul stocks rebound sharply from 2-day losing streak on signs of easing oil prices

A stock ticker at Hana Bank headquarters in central Seoul shows the benchmark KOSPI closing at 5,583.9 points, Thursday, marking its second-largest daily gain of 9.63 percent, while the secondary bourse Kosdaq posts a record daily gain of 14.1 percent to finish at 1,116.41 points. Yonhap

Seoul stocks rebounded, Thursday, after two days of sharp declines, with the benchmark KOSPI marking the second-largest daily gain of 9.63 percent and the secondary bourse Kosdaq posting a record daily increase of 14.1 percent.

The rebound was sharp enough to trigger buy-side sidecar trading curbs, in contrast to Wednesday’s sell-side curbs, reflecting heightened volatility in the domestic stock market following U.S.-Israel military strikes on Iran, Feb. 28.

The KOSPI rose 9.63 percent to close at 5,583.9 points, Thursday, snapping the two-day losing streak after falling 7.24 percent on Tuesday and 12.06 percent on Wednesday.

Thursday's gain marked the second-largest on record, behind the all-time high of 11.95 percent set on Oct. 30, 2008.

The Kosdaq gained 14.1 percent to end at 1,116.41 points, Thursday, reversing declines of 4.62 percent and 14 percent over the two previous days. The 14.1 percent increase marked the largest daily gain for the secondary bourse, topping the previous 11.47 percent recorded on Oct. 30, 2008.

Both indexes sustained upward momentum throughout the session after the KOSPI opened at 5,250.92 points and the Kosdaq at 1,023.84 points.

At one point, the sharp pace of gains set off a buy-side sidecar as the KOSPI 200 and Kosdaq 150 futures indexes — baskets of the top 200 and 150 stocks, respectively — rose more than 5 percent from the previous day’s close.

A curb occurs when a rise or fall exceeds the 5 percent threshold, temporarily halting program orders for five minutes before trading resumes. On Wednesday, such curbs were triggered on the sell side for both the KOSPI and Kosdaq.

On the KOSPI, retail investors were net buyers of stocks worth 1.79 trillion won ($1.22 billion), while institutional and foreign investors sold a net 1.71 trillion won and 144 billion won, respectively.

On the Kosdaq, foreign and institutional investors led net purchases, acquiring 831 billion won and 741 billion won, respectively, in contrast to retail investors, who sold a net 1.5 trillion won.

Analysts said the rebound was supported in part by eased concerns over global oil prices after the U.S. government on Wednesday (local time) announced measures to support oil tanker shipments through the Persian Gulf.

For instance, U.S. crude rose just 0.13 percent to close at $74.66 per barrel, Wednesday, after advancing about 6 percent on Monday and around 5 percent Tuesday.

Buying sentiment was also credited to President Lee Jae Myung’s order earlier Thursday to implement a market stabilization program worth 100 trillion won.

Analysts, however, remained cautious about whether domestic stocks could fully recover to their position as the world’s fastest-growing equities before the Iran crisis.

Before the crisis, the KOSPI had recorded the fastest gains globally this year, rising 48.1 percent, followed by the Kosdaq at 28.88 percent.

“Given the large gains in the domestic stock market over a short period, volatility is amplified, and a correctional phase is likely to continue for the time being,” Yu Sung-man, research head at Leading Investment & Securities, said.

"Fluctuating oil prices and currency exchange rates amid the Middle East conflict are also likely to weigh on the market," he added.

Kang Song-chul, a researcher at Eugene Investment & Securities, said, "It is difficult to expect the extraordinary upward trend to continue as the ascent over the past few months was unusually rapid."