KOSPI Down 40% from Peak: South Korea's Finance Minister Holds Emergency Meeting and Apologizes Over Leveraged ETFs
Alina Collins
South Korea's KOSPI has plunged roughly 40% from its June high, triggering circuit breakers two days running; Finance Minister Choo Kyung-ho convened an emergency meeting and publicly apologized for lax review of leveraged single-stock ETFs, with tighter rules set to land July 31.
How far has the Korean market fallen, and why the back-to-back circuit breakers?
KOSPI has dropped about 40% from its June peak, hitting market-wide circuit breakers on two consecutive trading days.
The immediate trigger: SK Hynix reported quarterly earnings below expectations, raising doubts about the sustainability of the AI investment boom and accelerating retail selling.
This means → the core Korean equity narrative — "AI lifts the semiconductor cycle" — is being stress-tested by actual earnings. Once confidence cracks, selling feeds on itself.
Why are leveraged single-stock ETFs drawing so much blame?
South Korea launched leveraged single-stock ETFs — funds that amplify a single stock's daily move by two times or more — in May this year. At a parliamentary hearing, multiple lawmakers argued the products magnified volatility.
In plain terms = speculative money piled into a handful of blue chips, making rallies sharper and sell-offs deeper, artificially widening the market's swings.
Ruling-party lawmaker Lee Jong-wook said bluntly: "This country has turned into a casino. These products should never have been allowed on the market."
The finance minister apologized — but what did he actually say?
Finance Minister Choo Kyung-ho publicly apologized at the hearing for insufficient pre-listing review of leveraged ETFs, but maintained the products are only one of several factors behind the turbulence.
He said a package of stabilization measures is already in place and "additional steps will be introduced if necessary." Pressed on whether he would resign, he called the discussion "irresponsible" and said the priority is stabilizing the market.
This reflects a government trying to walk a tightrope between admitting a mistake and preventing panic — the apology aims to ease political pressure without letting the market read it as a full policy failure.
What tighter rules are coming next?
Korea's Financial Services Commission announced stricter leveraged-ETF regulations taking effect July 31.
If the new rules fail to cool demand, regulators may impose investment caps on retail investors, mandatory investor education, and additional trading restrictions.
This means → July 31 is the key observation window: whether the new rules can suppress leveraged-ETF demand and rebuild confidence will determine if this sell-off has found a floor.
Content is for reference only, not financial advice.