Kospi the world's most volatile market in 2020, FKI says

The Kospi was more volatile than all other major indexes, according to a report from the Federation of Korean Industries (FKI).

FKI on Tuesday released a report on global stock market trends and characteristics of the domestic stock market.

The report said Kospi’s volatility in 2019 was 17.7 percent, the lowest of all global indexes studied. But Kospi's volatility last year was 97.1 percent, the highest globally.

Index volatility is calculated by subtracting the lowest index level of a year from the highest, and dividing the result by the lowest.

Kospi’s volatility rate last year was followed by the S&P 500’s, which came in at 67.9 percent, and the Nikkei 225’s, which was 66.5 percent.

FKI noted abundant liquidity as governments battled Covid-related recessions as a reason behind a sudden rise in Kospi.

Samsung Electronics is 28.4 percent of the Kospi. Influence of a single company on an index was much smaller in other countries. Tencent accounted for 16.6 percent of Hong Kong’s Hang Seng Index, while Apple accounted for 6.7 percent of S&P 500.

Retail investor activity hit a five-year high in 2020, at 65.8 percent of the total transactions made, up 18.3 percentage points from the previous year. The figure hovered around 50 percent from 2016 through 2019.

The FKI noted global financial institutions project global indexes to climb further this year on abundant liquidity and improved economic activity from the distribution of Covid-19 vaccines. But it added the market could reverse if economic growth rates and corporate earnings don’t meet expectations. Morgan Stanley warned the S&P 500 could fall as much as 8 percent this year if inflation increases, according to a report from Forbes.

Korea's economy contracted 1.1 percent last year compared to 2.0 percent growth in 2019, while the U.S. economy contracted 3.5 percent last year compared to 2.2 percent growth in 2019.

BY JIN MIN-JI [jin.minji@joongang.co.kr]