Retail investors dominate four-hour session as thin liquidity triggers sharp swings

A monitor displays trading activity during the launch of the Korea Exchange’s new after-hours market in Yeouido, Seoul, Monday. The session allows continuous trading in Kospi and Kosdaq stocks from 4 p.m. to 8 p.m. (Yonhap)
A monitor displays trading activity during the launch of the Korea Exchange’s new after-hours market in Yeouido, Seoul, Monday. The session allows continuous trading in Kospi and Kosdaq stocks from 4 p.m. to 8 p.m. (Yonhap)

The Korea Exchange’s new after-hours market drew more than 1.8 trillion won ($1.3 billion) in turnover on its first day Monday, but thin trading also fueled sharp swings among smaller stocks.

The four-hour session, which allows continuous trading from 4 p.m. to 8 p.m., recorded 1,637 volatility interruptions — more than four times the 400 triggered during regular trading.

Total turnover reached 1.82 trillion won, with 72.24 million shares changing hands, according to the KRX. Kospi-listed stocks accounted for about 1.3 trillion won and Kosdaq shares for 492.4 billion won.

The session represented 6.6 percent of the market’s total daily turnover of 27.6 trillion won.

The KRX introduced the session Monday to replace its previous single-price auction from 4 p.m. to 6 p.m. Trading increased toward the evening, with the final hour generating 30.7 percent of turnover, compared with 19.6 percent during the first hour.

Retail investors dominated the market, accounting for 93 percent of transactions. Foreign investors represented 3.9 percent and institutions 2.1 percent. Individuals were net buyers of 53.7 billion won, while foreign and institutional investors recorded net sales.

Volatility was concentrated among small- and mid-cap stocks with limited liquidity. Many of the companies recording the most interruptions had market capitalizations of about 30 billion won.

SG Healthcare triggered the mechanism 19 times, the most of any stock. Daeho Special Steel followed with 18, while InnoAxe and Hanchang Paper each recorded 15.

Hanwha Galleria jumped 15.4 percent from its regular-session close to 3,070 won around 4:20 p.m. amid speculation over a possible sale of its Timeworld department store in Daejeon. After two static volatility interruptions, the stock fell to 2,635 won around 7:50 p.m.

The KRX attributed the sharp movements to thin participation, saying relatively small orders could have an outsized effect on prices.

The new market covers 2,459 stocks, more than four times the 606 available on alternative trading platform Nextrade. The exchange said the longer session would help investors respond to after-hours news and improve access across global time zones.

By Choi Yeon-jae (ch0221@heraldcorp.com)