"Please, don't bet against it again." — a Samsung Electronics investor
"Another crash on Monday — I'm so worried." — an SK Hynix investor
South Korea's stock market, which had barely clawed its way back, was gripped again by fear of a fresh wave of bearish bets heading into the new week. The Kospi surged nearly 18% in a single session on Friday, posting a record single-day gain, but anxiety is mounting again as the prospect of a US-Iran confrontation resurfaces.
Retail investors nursing heavy losses are on edge over the possibility that money will pour back into inverse products that profit from declines in Samsung Electronics and SK Hynix shares. The fragile recovery in sentiment toward AI and semiconductor shares could easily be reversed.
Single-stock 2x leveraged products tied to Samsung Electronics and SK Hynix were identified as one of the key drivers behind the market's extreme swings. Regulators ultimately stepped in, requiring investors to hold at least 30 million won ($20,800) in cash deposits before purchasing 2x leveraged products.
Experts expect the wild swings — sharp drops followed by sharp rebounds — to continue through August. Panic selling by retail investors has been especially pronounced amid the market's seesaw volatility.
After tumbling roughly 40% from its June 22 closing high of 9,114.55, the Kospi capped a turbulent July with a record single-session surge on Friday, closing at 6,595.45 — up 1,001.89 points, or 17.91%, the largest percentage gain in the index's history.
Samsung Electronics soared 26.81% on Friday to close at 262,500 won, its biggest ever single-day gain. SK Hynix jumped 29.95% to 1.72 million won, hitting its first upper circuit limit since 2009.
Foreign media have expressed concern, with several outlets noting that the Korean market is trading as if it has bipolar disorder — swinging between fear and euphoria overnight.
CNBC said investors are watching closely whether foreign buying will continue even after short-covering winds down. The outcome will determine whether the sharp rebound marks the start of a genuine recovery or turns out to be yet another violent swing in one of the world's most volatile markets.
Jeong In-yun, chief executive of Fibonacci Asset Management, told CNBC that the Korean market "is trading like it has bipolar disorder, oscillating between panic and euphoria overnight."
Khoon Goh, head of Asia research at ANZ Bank in Australia, said the Kospi "is trading like a meme stock or a cryptocurrency," adding that such moves are "not normal for a major benchmark index."
park@heraldcorp.com
