KOSPI Plunges, 'Fear Index' Surges Past 80 Amid Market Turmoil

South Korea's stock market experienced significant turbulence on Tuesday, with the benchmark KOSPI index plummeting over 5% in early trading. This sharp downturn triggered a sell-off and sent the KOSPI 200 Volatility Index (VKOSPI), often referred to as the 'Korean fear index,' back above the 80 mark for the first time in seven trading days.

The VKOSPI, which reflects the market's expected volatility based on option prices, typically surges when the KOSPI experiences sharp declines. As of Tuesday morning, the index stood at 80.43, a notable increase from its recent levels. This indicator has seen significant fluctuations this year, spiking to 83.58 in early March following the outbreak of the Israel-Iran conflict and later falling to 46.54 in mid-April.

However, the index began a renewed upward trend last month, surpassing 90 and reaching a post-global financial crisis high of 97.99 in late May. After a subsequent decline that pushed it below 80 in the days leading up to Tuesday's trading, the 'fear index' has once again signaled investor anxiety amidst the current market sell-off.