Domestic market volatility increases amid Middle East tensions, triggering a surge in VI

TechubNews · 2026-03-08T01:34:04+00:00

Recent military tensions in the Middle East have led to increased volatility in the South Korean stock market. The VI mechanism has been frequently triggered, and both the Kosdaq and Kospi markets have reflected instability. Experts recommend paying attention to the risks of leveraged product investments and advocate for an investment strategy centered on intrinsic value.

TechubNews

2026-03-08 01:34:04

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Recent tensions in the Middle East have caused significant volatility in the domestic stock market, leading to frequent activation of the Volatility Interruption (VI) mechanism over consecutive days. As the U.S.-Iran military standoff intensifies, the Korea Composite Stock Price Index (KOSPI) has dropped sharply, with various safety mechanisms now in operation.

According to the Korea Exchange, the VI mechanism was triggered a total of 3,314 times over the past four days (March 3 to 6). This averages over 828 triggers per day, a 4 to 6 times increase compared to normal. The VI mechanism temporarily halts trading and switches to a single-price trading mode for 2 minutes when stock prices, ETF prices, or ETN prices experience sharp fluctuations.

In particular, volatility in listed index funds and listed index securities has risen significantly, driven by increased short-term investment demand in defense-related stocks. The “February Monthly Leverage Defense Industry Top 5 ETN” was the most frequently triggered product, with 83 VI activations during this period. This ETN aims to double the returns of defense industry stocks, and ongoing military tensions seem to have boosted investor sentiment.

Meanwhile, the KOSDAQ market also triggered the VI mechanism 3,294 times. Reflecting market instability, both KOSPI and KOSDAQ activated the sidecar trading mechanism. The sidecar temporarily suspends buy or sell orders during specific price movements, and circuit breakers also caused temporary trading halts.

Experts note that the frequent activation of market stability mechanisms indicates extreme market volatility. During such high-volatility periods, caution is advised regarding leveraged products, and investors are encouraged to focus on intrinsic value rather than chasing short-term fluctuations. These developments suggest future market instability, emphasizing the need for ongoing vigilance and appropriate investment strategies.

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