The South Korean stock market rebounded on August 6, a day after the worst crash in history amid fears of a U.S. recession. The benchmark KOSPI stock index gained 3.3% to end the session at 2,522.15. The small-cap KOSDAQ rose 6.02% to close at 732.87.
The Korea Exchange had activated a sidecar trading halt when the KOSPI dropped over 10% during the trading session the previous day, suspending futures trading of equities. Circuit breakers were also triggered for the first time since March 2020, which curbs trading when the index falls or rises more than 8% from the previous close for over a minute.
This time, the Korea Exchange activated a sidecar trading halt shortly after the market opened to prevent panic after the KOSPI surged after recovering sharply from the previous day’s losses.
South Korean tech giant and KOSPI heavyweight Samsung Electronics rose 1.54% to 72,500 won, while SK Hynix climbed 4.87% to 163,700 won.
Analysts say Asian stocks bounced back after fears about a U.S. economic slowdown proved excessive. Japanese shares also rebounded sharply, with the Nikkei 225 stock index ending the day up 10.23% at 34,675.46 after plummeting over 12% the previous day.
“The recession panic caused by the U.S. jobs report and the global stock meltdown that followed it was highly unusual, so the stock market was bound to recover today,” said Yang Hae-jung, an analyst at DS Investment & Securities.
“U.S. services sector activity rebounded from a four-year low in July, exceeding market expectations, which seems to have boosted investor sentiment,” she added. The Institute for Supply Management (ISM) said that its nonmanufacturing purchasing managers (PMI) index rose to 51.4 in July from 48.8 in June.
