South Korea will double the daily trading range of shares starting next month as the country seeks to boost the appeal of its $1.3 trillion equities market.
Commencing June 15, stocks on the Kospi and Kosdaq indexes will be able to move 30 percent compared with the current level of 15 percent, the Korea Exchange said in an e-mailed statement. The Financial Services Commission first announced the plan in September, after the 200-day average trading volume of the benchmark stock gauge fell in July to its lowest level since 2007.
While the move may boost trading volumes, investors are more likely to focus on corporate earnings than trading limits, according to Samsung Securities Co. strategist You Seung Min. The Kospi has climbed 11 percent this year, outperforming the MSCI Emerging Markets Index, as profits at the nation’s largest companies topped estimates.
“The government’s efforts to invigorate the market will send a positive message to investors, though it’s not enough by itself to stimulate the market,” You said by phone from Seoul.
To avoid excessive price volatility, the bourse will impose a two-minute cooling off period for any stock that moves more than 10 percent, according to the statement. If either of the Kospi or Kosdaq indexes fall in excess of 8 percent for more than a minute versus the previous close, all trading of shares will be halted for 20 minutes, it said.
The daily trading range of depository receipts, equity-traded funds and equity-traded notes will also double to 30 percent, according to the statement.
The Kospi gained 0.3 percent at the close, while the Kosdaq added 0.5 percent.