▲ KOSPI and KOSDAQ Simultaneous Buying Circuit Breaker Triggered

The domestic stock market surged during trading hours, triggering buying circuit breakers simultaneously in both the KOSPI and KOSDAQ markets. As both markets showed steep gains with the KOSPI jumping more than 10%, buying orders concentrated over a short period.

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The buying circuit breaker is a mechanism designed to temporarily limit excessive buying inflows into the spot market caused by rapid surge in futures prices, thereby mitigating sharp market fluctuations. Unlike the selling circuit breaker triggered during sharp declines, it activates when markets surge sharply over a short period.

▲ Sharp Rebound After Sharp Decline...Investor Sentiment Shifts Abruptly

This surge drew attention as it showed a rapid reversal of the selling pressure that had weighed on the domestic stock market recently. With stock prices having fallen significantly over a short period followed by an influx of bargain-hunting buying, investor sentiment recovered all at once.

Particularly, the KOSPI led the index rebound with a surge exceeding 10%. The KOSDAQ also rallied in tandem, showing strong buying flows across the entire domestic market rather than being limited to a specific market.

▲ Risk of Panic Selling Reversal Amid Increased Volatility

However, caution was necessary in interpreting this surge as a full-fledged trend reversal in the stock market. If investors' fear sentiment expanded excessively during the recent sharp decline, concentrated bargain-hunting in stocks that had fallen sharply could widen the rebound range.

Particularly, as sharp declines and sharp rises appeared consecutively, the possibility that supply-demand and investor sentiment rather than corporate earnings or economic outlook would drive index movements increased. Accordingly, even if the index rose significantly, it was necessary to separately confirm whether the market's fundamental strength had actually recovered.

▲ Future Rebound Depends on Foreign and Institutional Buying

Whether the stock market can transition to stable upward momentum in the future depends on whether buying by foreign investors and institutions continues. It would be difficult to restore the level of market confidence before the sharp decline with only temporary short covering and bargain-hunting by individual investors.

Particularly, in high-volatility market conditions like recent times, trading volume and supply-demand flows over the following days could be a more important judgment criterion than a single day's index gains. If foreign capital continues to flow in and buying centered on large-cap stocks continues, this rebound could be evaluated as a signal of trend recovery rather than merely a technical rebound.

▲ Stock Market Stability Put to Test by 'Plunge Followed by Surge'

The fact that buying circuit breakers were simultaneously triggered in both KOSPI and KOSDAQ demonstrated how volatile the current domestic stock market is. As the market direction changed sharply from plunge to surge, market stability was again put to the test.

Ultimately, what matters is not the gain rate itself, but how stably the market maintains its upward momentum following the surge. Only when investor fear subsides and buying is supported by foreign and institutional supply-demand flows and corporate earnings would this rebound be expected to transcend a temporary 'reversal after plunge.'