Kospi Defends 7,000 Level Amid Quadruple Witching and ETF Rebalancing

South Korea’s benchmark Kospi index closed at 7,033.92 on September 10, limiting its decline to 0.25% despite the convergence of quadruple witching expiry and significant ETF rebalancing. The index had dipped to 6,898.45 during the session before recovering in afternoon trading. This resilience came as foreign investors sold 2.7504 trillion won ($1.99 billion) of equities, a massive outflow that was partially offset by net buying from other corporations totaling 1.6496 trillion won ($1.19 billion) and retail investors adding 1.0931 trillion won ($792 million), marking their first net buy in six trading days.

The market’s ability to hold the 7,000 level hinged on support from major semiconductor players. Samsung Electronics and SK Hynix, which faced expected mechanical selling due to index weight caps, saw their share prices stabilize after both companies engaged in share buybacks. These corporate purchases helped absorb the selling pressure that analysts had predicted would result from the reshuffle of KRX sector indexes, where the weightings for both chipmakers exceeded the 20% cap.

Corporate Buybacks Offset Index Rebalancing

The primary driver of volatility was the regular reshuffle of the KRX Semiconductor Index, which caps individual constituent weightings at 20%. Prior to the adjustment, SK Hynix’s weighting had risen to the 36% range and Samsung Electronics’ to the 22% range. This discrepancy implied substantial mechanical selling to bring both names into compliance. However, the anticipated drop in share prices was mitigated as both companies executed buyback programs. Samsung Electronics closed down just 0.19% and SK Hynix lost 0.16%, recouping most of their earlier intraday losses of over 2%.

Institutional investors extended their net-buying streak to six consecutive sessions, adding 3.6 billion won ($2.6 million) to the market. The combined buying pressure from other corporations and retail investors created a floor beneath the major chipmakers, preventing the index from sliding further into negative territory during the high-volatility expiry window.

Kosdaq Gains Driven by Semiconductor Components

While the Kospi remained flat, the Kosdaq index rose 0.79% to close at 836.92. This gain was led by semiconductor parts, materials, and equipment stocks that saw their weightings increase in the KRX Semiconductor Index. TSE surged 14.15% and Jusung Engineering climbed 7.02%, benefiting directly from the index adjustments. TES, which was newly added to the index on that day, also edged up 0.39%, reflecting positive market reception of its inclusion.

Other notable Kosdaq performers included Fadu, which advanced 6.59%, and EcoPro BM, up 3.31%. These gains were part of a broader rotation into smaller-cap semiconductor suppliers as investors sought alternatives to the large-cap chipmakers facing rebalancing pressure. Conversely, other component makers like Wonik IPS fell 1.08% and EO Technics dropped 3.19%, indicating selective rather than uniform buying across the sector.

Energy Stocks Rise on Geopolitical Tensions

Beyond semiconductors, the Kospi found additional support from the oil refining and shipping sectors. Escalating geopolitical tensions in the Middle East pushed Brent crude prices above $100 per barrel, triggering a sharp rally in related equities. Korea Petroleum jumped 10.30% and Heung-A Shipping gained 8.01%, providing a defensive cushion for the broader index. This sector-specific strength helped offset the losses in other areas of the market during the afternoon session.

According to reporting from GN stocks/chips, the interplay between mechanical index adjustments and active corporate share repurchases was the decisive factor in preventing a sharper decline. The market demonstrated that large-scale corporate liquidity events can effectively neutralize the selling pressure associated with routine index rebalancing, even on high-volatility days like quadruple witching.