BlockBeats news, on July 21, according to Bloomberg, South Korea's KOSPI index has seen its volatility exceed 60% this year, nearly double that of Japan's Nikkei 225 index and even higher than Bitcoin. The Korean exchange has triggered circuit breakers seven times so far this year as of mid-July, compared to zero times in 2025 and only once in 2024.
Samsung Electronics and SK Hynix currently account for more than 50% of the KOSPI index’s weight, turning index funds into a concentrated bet on AI chip performance. At the end of June, when the KOSPI reached a record high, over 650 of its 831 constituent stocks still declined, highlighting the index’s heavy reliance on a few major chip stocks.
The scale of South Korea’s leveraged ETFs has also expanded rapidly. According to Goldman Sachs data, assets in South Korean leveraged ETFs tracking indices and individual stocks have grown from $5 billion at the beginning of the year to over $40 billion. These products, particularly those tied to Samsung Electronics and SK Hynix, now account for more than 70% of daily trading volume on the Korean stock market, further amplifying price volatility. On July 16, South Korean regulators suspended the listing of new leveraged products tied to individual stocks.
This year, South Korean individual investors have invested over 100 trillion won in KOSPI stocks, while foreign investors net sold approximately $108 billion during the same period, including over $40 billion withdrawn from SK Hynix. Goldman Sachs believes that leveraged ETFs are a primary risk requiring close attention in today’s South Korean market.