South Korea’s Kospi index plunged over 5% as a tech-led selloff and the collapse of leveraged ETFs triggered significant losses for retail investors and prompted government apologies.

Key Points

• The Kospi index fell to 6,238 on Thursday, driven by sharp declines in major chipmakers Samsung Electronics and SK Hynix.
• Foreign investors offloaded $108.5 million in South Korean shares, contributing to the market's downward momentum.
• The index previously hit a record high of 9,386 in June, fueled by a global artificial intelligence investment frenzy.
• Finance Minister Koo Yun-cheol apologized for the introduction of single-stock leveraged ETFs, which analysts say amplified market volatility.
• Nomura analysts suggest the market may stabilize through corporate share buybacks and treasury-share cancellations by large-cap companies.

Why it Matters

The volatility highlights the risks associated with high-concentration markets and the use of complex leveraged financial products by retail investors. This downturn has eroded public trust in the South Korean stock market and forced regulators to reconsider oversight of speculative investment vehicles.