Korea Exchange sees erratic trading in first after-hours session

Summary

In South Korea, the first after-hours trading session on the main stock exchange revealed significant challenges, marked by erratic trading largely driven by retail investors, while institutional and foreign investors largely stayed out due to concerns over thinner liquidity. The Korea Exchange (KRX) recently introduced this after-hours trading to create more opportunities and better compete with global exchanges, which are exploring extended trading hours. Notably, recently implemented guidelines excluded ETFs and ETNs to address volatility issues, allowing most KOSPI and Kosdaq stocks to be traded in real time.

Analysis

South Korea Stock Exchange: The Korea Exchange (KRX) serves as South Korea's sole operator for its primary securities markets, including the KOSPI and Kosdaq, facilitating trading in stocks, bonds, and derivatives. It recently launched its inaugural after-hours trading session from 4 p.m. to 8 p.m. following the regular session, marking a step toward extended and potentially around-the-clock operations. This initiative seeks to boost competitiveness with major global exchanges amid growing interest in aligning with international investor schedules. Product Scope: ETFs and ETNs were excluded from the new after-hours session to mitigate volatility concerns, while most KOSPI and Kosdaq stocks became eligible for real-time trading. Market Extension: KRX introduced after-hours trading to expand opportunities and compete with global peers exploring longer trading windows, such as 23-hour sessions planned by Nasdaq and the New York Stock Exchange. Investor Dynamics: The initial after-hours session featured predominantly retail participation, with institutional and foreign investors largely remaining on the sidelines due to thinner liquidity.

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