(LEAD) (News Focus) KOSPI volatility index rises simultaneously as stock market rallies to record high

Lead

SEOUL — South Korea's benchmark KOSPI index has been on a record-breaking rally, approaching the unprecedented 9,000-point mark, but a simultaneous rise in the market's volatility gauge is fueling concerns that gains are increasingly concentrated in a handful of heavyweight semiconductor stocks, according to data from the Korea Exchange.

The KOSPI 200 volatility index, or VKOSPI, closed at 74.26 on Friday, up 3.72 percent from the previous session, marking the fourth consecutive session of sharp rises, as reported by Yonhap News Agency. The index, which serves as a "fear gauge" for the market, has jumped 36 percent this month, from 54 to 73, while the KOSPI has surged more than 27 percent over the same period, from around 6,500 to 8,400 points.

Coverage Comparison

The current market situation has been covered by multiple dispatches from Yonhap News Agency, offering consistent data but slightly different points of emphasis. One report highlights the market concentration issue, noting that more stocks listed on the KOSPI have declined than advanced in recent weeks, despite the overall index rally. Another dispatch, with a more cautionary tone, focuses on the unusual parallel rise of the KOSPI and VKOSPI, attributing it to the growing weight of Samsung Electronics and SK hynix in the index.

The reports agree on the core facts: the KOSPI has risen to record highs, the volatility index has spiked, and the market's rally is being driven by a narrow group of large-cap stocks. However, they differ in their framing, with one emphasizing the structural shift in market dynamics and the other highlighting the potential risks of such concentration.

Key Claims

According to data from the Korea Exchange, an average of 210 KOSPI-listed stocks advanced during the two-week period from May 26 through June 5, while 586 declined, indicating that the market's upward movement is not broadly shared. On May 27, when the KOSPI jumped 2.55 percent, only 72 stocks advanced, whereas on May 22, a day of modest gains, 713 stocks rose, as detailed in a Yonhap report.

The top-cap stocks Samsung Electronics and SK hynix have seen significant gains over the cited period, rising 13.72 percent and 14.32 percent, respectively. Analysts quoted by Yonhap suggest that these companies have evolved beyond mere market leaders to become common underlying assets across a wide range of financial products. "The current market concentration cannot be explained solely by investor sentiment," said Noh Dong-gil, an analyst at Shinhan Securities.

Analysts also attribute the unusual parallel movement of the KOSPI and VKOSPI to the growing concentration in these two large-cap stocks, as well as increased trading in leveraged exchange-traded funds (ETFs). "KOSPI volatility has widened due to the growing weighting of Samsung Electronics and SK hynix," said Kim Jae-seung, an analyst at Hyundai Motor Securities. "Since these two companies account for nearly half of the KOSPI, movements in these stocks increasingly drive fluctuations in the broader KOSPI 200," he added.

The rapid growth of leveraged products may be amplifying market swings by concentrating investor flows into a narrow group of heavily weighted stocks, a claim carried by Yonhap reports.

Perspectives

The divergence between the KOSPI's record highs and the rising volatility index suggests that investors are becoming increasingly cautious even as the benchmark climbs. The data indicate that the market's gains are not broad-based, with fewer stocks participating in the rally. This has fueled expectations that investors will continue to concentrate on a handful of top-cap chip leaders driving the KOSPI, as per the analysis in the reports.

The reports also note that the VKOSPI climbed as high as 82.23 during intraday trading on May 18, the highest level since March 5, a few days after the United States conducted airstrikes on Iran, indicating that market volatility remains elevated compared to recent history.

While the KOSPI's march toward 9,000 points is historic, the simultaneous rise in volatility serves as a reminder that the rally's foundation may be narrower than it appears. As the market becomes increasingly reliant on a few large players, the potential for sharp swings in either direction remains a key concern for investors, according to the analysts cited.