KOSPI closes higher at 6,856.83 after wild swing, Kosdaq hits year low

The KOSPI and Kosdaq indexes are displayed in the dealing room of Hana Bank in Seoul, Tuesday. The benchmark KOSPI closed at 6,856.83, up 0.73 percent from the previous session, while the secondary Kosdaq closed at 783.98, down 1.92 percent. Yonhap

The benchmark KOSPI staged a dramatic turnaround Tuesday, recovering from an intraday plunge of nearly 5 percent to close 0.73 percent higher as foreign and institutional investors bought battered semiconductor shares.

The secondary Kosdaq, however, fell to its lowest close of the year.

KOSPI ended at 6,856.83, according to the Korea Exchange. The index opened lower and briefly sank below 6,500 before bargain hunting erased its losses and pushed it back into positive territory.

Retail investors sold a net 4.15 trillion won ($2.8 billion) of shares, while foreign and institutional investors purchased a net 951 billion won and 3.23 trillion won, respectively.

SK hynix rose 3.69 percent to 1,913,000 won, while Samsung Electronics gained 3.34 percent to 263,000 won.

"KOSPI has plunged 19.7 percent in just 14 trading sessions since the start of July, marking its steepest correction since October 2008, when it fell 23.1 percent during the global financial crisis," said Kiwoom Securities analyst Han Ji-young.

"Given that even previous major crises unfolded over several months, the latest sell-off stands out as highly unusual in both speed and severity. That suggests the market may now be in one of its most deeply oversold conditions on record," Han added.

TSMC reported record revenue for both the second quarter and June, though heavy selling in Korean and U.S. semiconductor shares continued to weigh on investor sentiment.

"Profit-taking intensified on concerns that SK hynix’s second-quarter earnings may fall short of market expectations, compounded by a view that the positive catalyst from its ADR [American depositary receipt] listing had run its course," said Lee Kyoung-min, an analyst at Daishin Securities.

"Still, bargain hunting helped the stock recover losses as investors remained optimistic about an expansion in long-term agreements and the continuation of the semiconductor supercycle," Lee added.

Geopolitical tensions also pressured equities as Iranian attacks on oil tankers and U.S. airstrikes on Iran continued. A surge in U.S. Treasury yields added to the pressure, reviving concerns that the Federal Reserve may tighten monetary policy.

Kosdaq was hit harder, falling 1.92 percent to 783.98, its lowest close of the year. A sell-side circuit breaker was triggered at 12:06 p.m., suspending program sell orders for five minutes. The index pared some losses, though biotechnology shares remained under pressure.

The won strengthened 10.4 to close at 1,493.0 per dollar.