South Korea’s KOSPI index volatility exceeds 60%, higher than Bitcoin—driven mainly by two leading AI chip makers and leveraged ETFs

PANews July 21, according to Bloomberg, the volatility of South Korea’s KOSPI index this year has exceeded 60%, nearly twice that of Japan’s Nikkei 225, and even higher than Bitcoin, which is known for volatility. This year, South Korean exchanges have triggered the circuit breaker mechanism seven times (zero times in 2025; only once in 2024). The root cause of the volatility lies in two AI-chip giants—Samsung Electronics and SK Hynix—whose combined market value accounts for more than 50% of the KOSPI. The AI boom has driven their share prices to soar, but the sector’s valuation is highly dependent on investor sentiment, while AI has not yet generated enough revenue to cover construction costs.

The proliferation of leveraged ETFs has further intensified market volatility. South Korean retail investors have been actively using leveraged products; this year, more than $4 billion has flowed into leveraged ETFs tracking individual stocks, accounting for more than 70% of the related stocks’ daily trading volume and amplifying price fluctuations. Retail investors have net bought more than 100 trillion won (about $67 billion) worth of KOSPI stocks this year, while foreign investors have net sold about $1,080 billion. Goldman strategists noted that “leveraged ETFs are the main risk to watch.” Although margin debt has declined from its June peak, it remains significantly higher than the same period last year.