Tensions in the Middle East escalate, South Korea's KOSDAQ index volatility hits a six-year high intraday

As tensions escalate in the Middle East, the Korean stock markets experienced sharp fluctuations, with the KOSPI intraday volatility reaching its highest level in about six years. This is interpreted as a direct impact of geopolitical instability on investor sentiment, exacerbating market instability.

The KOSPI intraday volatility reached 11.42%, marking the first double-digit figure since the outbreak of COVID-19 on March 19, 2020. On that day, the difference between the highest and lowest stock prices was as high as 612.67 points. Intraday volatility measures the range of a market index’s daily fluctuations; the higher the value, the greater the market instability.

During the five trading days, intraday volatility decreased to 8.52%, showing signs of stabilization, but the average volatility since the beginning of the year remains relatively high at 2.82%. As conflicts between Iran and the US in the Middle East continue to intensify, investors are likely to remain cautious about risk assets.

On that day, the KOSPI200 Volatility Index (VKOSPI) closed at 73.71 points, still at a high level. This indicator reflects market fear, rising approximately 140.88% since the start of the year. This situation indicates that as global uncertainty increases, anxiety is spreading into the Korean domestic market.

After recovering 490.36 points from the previous day’s sharp decline, the KOSPI closed at 5,583.90 points. Such intense volatility suggests that the stock market will likely remain highly unstable in the near future. Given ongoing geopolitical tensions and economic changes that could trigger significant fluctuations, the market may need to adopt long-term investment strategies.