Why has KOSPI's volatility become so extreme recently:

Take SK Hynix as an example: its leveraged ETF assets are about $19.04 billion, more than four times its average daily trading volume of approximately $4.47 billion on the Korea Exchange.

The same goes for Samsung Electronics: the scale of related leveraged products is about $12.43 billion, while its average daily turnover is around $4.49 billion.

The mismatch in the Korean market is very severe, and it has become embedded in the market structure. The combined market cap of SK Hynix and Samsung Electronics accounts for nearly half of the entire KOSPI index.

When leveraged ETFs—especially 2x daily leveraged products—dominate trading in these two stocks, every fluctuation is amplified significantly.

The mechanism works like this: these ETFs need to reset their leverage ratios every day. On up days, they buy more shares to maintain 2x exposure.

On down days, they sell shares to rebalance. Since the scale of ETF assets is often far larger than normal intraday liquidity, this passive buying or selling creates additional pressure, especially near the close.

According to Bloomberg Intelligence, on a recent sharp down day, leveraged ETFs tracking Samsung and SK Hynix collectively needed to sell about $6 billion worth of stocks, equivalent to roughly 14% of the total trading volume of these two stocks that day. This causes stock price moves to be more violent than what the company's actual news would suggest, and the rebound is equally exaggerated.

South Korea only launched single-stock leveraged ETFs in May 2026, but these products quickly became extremely popular. Local investors are keen to chase twice the daily volatility of AI memory leaders.

The CSOP SK Hynix 2x Leveraged product listed in Hong Kong alone saw its asset size fluctuate between $10 billion and over $17 billion at its peak, making it one of the largest single-stock leveraged products globally.

Minor changes in sentiment or random news can trigger daily swings of 8% to 13% in SK Hynix or Samsung, which in turn drive the entire KOSPI index.

Recently, KOSPI has experienced multiple index-level moves of 9% to 10%, while these leveraged products have seen gains or losses of 20% to 25% or more on the same day.

The high concentration of these two stocks, combined with oversized daily-reset leveraged products, creates a feedback loop that amplifies both upside and downside moves.

For these mega-cap semiconductor stocks, this has become the new market reality. Close attention must be paid to fund flows, especially during rebalancing periods and around earnings.

This Bloomberg chart clearly illustrates why the old "normal" volatility rules no longer apply to Korean semiconductor stocks.