South Korean Stocks Swing Over 60%, Outpacing Bitcoin, Driven by AI Chip Plays and Leveraged ETFs

Price Action
โดย Money & Banking·Read original
Summary · why it matters

South Korea's stock market has experienced severe volatility this year, with the Kospi index swinging more than 60%, nearly double the volatility of Japan's Nikkei 225 and exceeding that of the cryptocurrency Bitcoin. This has triggered circuit breakers nine times in the first seven months of 2026, whereas none were used in 2025 and only once in 2024. A key factor is Samsung Electronics and SK Hynix, the world's leading memory chip makers that have benefited from the AI boom. Together they account for over 50% of the Kospi's weighting, tying the market's direction to just a handful of stocks. Moreover, the popularity of leveraged ETFs among South Korean retail investors has amplified the swings. More than ten leveraged ETFs referencing these two stocks have launched this year, with over 90% of units held by retail investors. As a result, trading in the two stocks and related ETFs has at times accounted for more than 70% of total market turnover. The South Korean government is preparing measures to curb retail investment to reduce systemic risk. Retail investors have poured over 110 trillion won into the stock market this year, while foreign investors have net sold around 115 billion dollars worth of South Korean shares, including over 40 billion dollars of SK Hynix. Analysts at JPMorgan believe the selling pressure from deleveraging is nearing its end, which could help market volatility gradually ease going forward.

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