With the sharp rise of the Korea Composite Stock Price Index (KOSPI) this year, large-cap stocks led by SK Hynix have been successively designated as investment warning varieties. The listing of major large-cap stocks (rather than small and medium-sized stocks) on the warning list is considered unusual.
According to the Korea Exchange, as of December 11, SK Hynix and SK Square have been designated as investment warning varieties. The stock prices of the two companies have increased by 244% and 314% respectively compared to a year ago, along with factors such as reaching the highest closing price in the last 15 trading days, which constitute the basis for the warning designation. Investment warnings are an intermediate stage of the market alarm system, applicable when there are concerns about unfair trading, such as a surge in stock prices or significant buying and selling by a few accounts.
This designation is not merely a warning. Once classified as an investment warning variety, credit financing purchases will be restricted, and if the stock price further surges afterward, it may lead to trading suspension measures. If designated as the highest alert level of "investment risk," trading of that stock will be completely halted for the entire day. This is a measure to maintain market integrity, but it can sometimes cause confusion and inconvenience for individual investors.
In fact, after the warning designation was announced, the stock prices of SK Hynix and SK Square fell by 3.75% and 5.09%, respectively, showing weakness. At the same time, although the KOSPI index rose by 0.64% due to the boost from the news of the U.S. benchmark interest rate cut, the varieties designated with warnings were neglected during the upward trend. This indicates that the warning designation has played a role in suppressing investment sentiment.
Since the beginning of this year, the total number of investment warning varieties has reached 72, exceeding last year's total (44). The number of times the most severe level of "investment risk" has been designated in the market warning system has also reached 7, which is seven times that of last year. In the past, the main targets were small and medium-sized technology stocks or thematic stocks with prominent speculative trends, but this year, a large number of leading stocks with high market capitalization have been included, drawing even more attention.
Some investors have expressed dissatisfaction with this trend. The Korea Stock Investors Association has raised questions about the inclusion of ultra-large stocks within the regulatory scope and pointed out fairness issues within the system, stating that warnings are only issued for rising varieties, while there are no corresponding measures for falling varieties. There are opinions suggesting that it is necessary to re-examine whether the exchange's warning system truly adapts to the current market environment.
There are concerns that if this investment warning designation centered on large-cap stocks continues, it may not only lead to short-term stock price adjustments but also suppress the overall investment sentiment in the market. However, as a measure to curb the overheating of stock prices and create a more stable investment environment, it may contribute to maintaining market health in the long term. How the future degree of market overheating and the direction of exchange regulatory policies will affect this trend is worth paying attention to.