{"id":85892,"date":"2026-07-14T14:30:07","date_gmt":"2026-07-14T14:30:07","guid":{"rendered":"https:\/\/www.europesays.com\/korea\/85892\/"},"modified":"2026-07-14T14:30:07","modified_gmt":"2026-07-14T14:30:07","slug":"inside-south-koreas-world-beating-bear-market","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/korea\/85892\/","title":{"rendered":"Inside South Korea\u2019s world-beating bear market"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A member of media stands near the screen showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of Hana Bank in Seoul, South Korea, Friday, July 10.Lee Jin-man\/The Associated Press<\/p>\n

When South Korean President Lee Jae Myung set a \u200c5,000-point target for the KOSPI last year, it looked wildly ambitious and needed a market that was going sideways to nearly double.<\/p>\n

Just barely a year later, the index blasted through 8,000 in a record run driven by an AI-fueled surge, but Lee insisted South Korean stocks were still cheap.<\/p>\n

Now that spectacular ascent has morphed into one of the market\u2019s \u2060most bewildering reversals. \u200bThe KOSPI has plunged into a bear market, shedding a quarter of its value since late June, yet remains by far the world\u2019s best-performing major equity market this year.<\/p>\n

The whipsaw highlights both the power and peril of South Korea\u2019s AI-fueled stock boom.<\/p>\n

Explosive earnings growth at semiconductor giants Samsung Electronics and SK Hynix continues to underpin the investment case. But a rally turbocharged by margin debt, concentrated in just two stocks and increasingly disconnected from the broader economy, has left \u200bregulators wary and investors exposed to violent swings.<\/p>\n

\u201cIt\u2019s a wake-up call,\u201d said Francis Tan, chief strategist for Asia \u200cat Indosuez Wealth Management in Singapore.<\/p>\n

\u201cBoth for those who are greedy and those who are fearful,\u201d he said. \u201cFor those who were fearful … it\u2019s a great time to buy in, but if you are already overweight this gives you a reminder that exposure (to chips) can be a volatile game.\u201d<\/p>\n

The KOSPI on Tuesday was trading below 7,000 points and has shed about 25 per cent from its record closing high of 9,114.55 points, confirming it has been in a bear market since late June.<\/p>\n

Even so, it remains up roughly 60 per cent this year, \u200ctrouncing the 10 per cent gain for \u200bMSCI\u2019s broadest gauge of global equities .<\/p>\n

\u201cJust as \u200cit went up explosively, it went down explosively,\u201d said Lee Seung-ho, a 24-year-old college student. He took out margin loans to turn 10 to 20 million won (US$7,000 \u200bto US$13,000) into 300 million won in the bull run, before seeing it evaporate.<\/p>\n

\u201cI think people like \u2060my mom and grandma, while saying Samsung is South Korea\u2019s No.1 company, do not fully understand the risks of leveraged investments (and) think about \u2060them rising twice as fast, without thinking of falling twice as fast.\u201d<\/p>\n

Few stocks showcase the market mania like SK Hynix, which rode a tidal wave of borrowed money to a tripling \u200bof its share price, helping it pull off a record US$26.5 billion U.S. listing by a foreign company. The stock debuted 14 per cent above its offer price.<\/p>\n

Yet the same stock is simultaneously experiencing the most wrenching volatility in its history, tumbling 14 per cent in Seoul on Monday, while a twice-leveraged ETF tracking the shares plunged more than 30 per cent in Hong Kong. The selling fed on itself, amplifying declines and helping drag the KOSPI 8 per cent lower.<\/p>\n

Samsung Electronics and SK Hynix together now account for just over half of the KOSPI, meaning sharp moves in either stock can overwhelm \u2060the broader market.<\/p>\n

\u201cThe impact of single-stock leveraged products on the index is higher than in other countries due to the high share of Samsung and SK Hynix in the KOSPI,\u201d said Park Woo-yeol, an analyst at Shinhan Securities. By comparison, a massive U.S. stock such as Nvidia represents only 7 per cent of the S&P 500.<\/p>\n

The KOSPI\u2019s volatility index stood at 82.07 on Tuesday, after hitting a record high of 97.99 on June 29, compared with 28.85 at end-2025.<\/p>\n

South Korea\u2019s Financial Supervisory Service said it would monitor the products and investigate excessive marketing, if needed. The Bank of Korea told a lawmaker it was watching whether single-stock ETFs could distort \u2060markets and increase volatility.<\/p>\n

Foreign investors have pulled a record of nearly US$110 billion from South Korean equities \u200bthis year, largely to prevent the country\u2019s soaring market value from skewing portfolio allocations. That has left domestic retail investors carrying much of the buying burden.<\/p>\n

Retail investors bought 13.2 \u2060trillion won worth of KOSPI shares this month after purchasing 42.4 trillion won in June. Their borrowed investment in KOSPI shares stood at 28 trillion won on July 14, versus a record high of 29.8 trillion won \u200con June 24.<\/p>\n

\u201cKorea is still the biggest portfolio overweight, but I started to reduce,\u201d said Alexander Redman, chief equity strategist at CLSA. \u201cWhat worries me is that retailers are in the \u200bdriving seat, because they use a lot of margin.\u201d<\/p>\n

To be sure, forecast profits at Samsung and SK Hynix have risen so sharply that forward price-to-earnings ratios have actually fallen this year despite share prices more than doubling.<\/p>\n

Yet some seasoned investors are staying away.<\/p>\n

\u201cI don\u2019t like to buy markets that have been going straight up, so I\u2019m not doing anything,\u201d said Jim Rogers, co-founder with George Soros of the Quantum Fund.<\/p>\n

\u201cI like things to \u200bbe depressed and to have lots of unhappiness and gloom around. That\u2019s not the case in South Korea yet.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A member of media stands near the screen showing the Korea Composite Stock…\n","protected":false},"author":2,"featured_media":85893,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[456],"tags":[18487,18478,845,18488,846,1523,18470,18489,363,18469,18483,18484,18480,18471,18468,119,12048,77,18482,18476,18498,18472,18473,9581,18479,2659,1175,18490,18475,18493,18494,18496,8374,18495,4262,18492,18474,17865,18486,414,18485,18491,18477,1013,4714,18481,17057,76,18497],"class_list":["post-85892","post","type-post","status-publish","format-standard","has-post-thumbnail","category-bank-of-korea","tag-alberta","tag-arts-news","tag-bank-of-korea","tag-bc","tag-bok","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/85892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=85892"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/85892\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/85893"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=85892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=85892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=85892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}