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South Korea's KOSPI plunges nearly 10% after regulator cautions on leveraged ETFs
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South Korea's KOSPI plunges nearly 10% after regulator cautions on leveraged ETFs
Jun 23, 2026 1:01 AM

SEOUL, June 23 (Reuters) - South Korea's KOSPI plummeted

9.99%, its steepest drop in more than three months, on Tuesday

as overseas investors sold chipmakers following regulatory

signals that the sector's rally had gotten overheated.

The benchmark KOSPI closed down 910.71 points, its

biggest daily plunge since March 4, at 8,203.84 points.

Market bellwether Samsung Electronics Co. ( SSNLF ) and peer SK

Hynix shed more than 12% each, wiping out billions

in market value and triggering an automatic 20-minute

bourse-wide trading halt in the afternoon.

The KOSPI index has become increasingly dominated by the

two chipmakers that now make up more than half of the market

value, as they propelled the index past the historic 9,100-point

level for the first time on Monday.

Tuesday's pullback underscores the intensifying volatility

of a market that critics worry has become dangerously

overstretched, says Alexander Redman, chief equity strategist,

CLSA.

"Volatility has blown out. (This kind of volatility) cannot

be explained without heavy retail engagement," said Redman.

"What worries me is that retailers are in the driving seat,

because they use a lot of margin, though the ratio to market cap

is small. What is more worrying is that regulators have now

allowed leveraged single security ETFs, pouring fuel onto the

fire."

On Monday, the head of South Korea's market watchdog Lee

Chan-jin said the government had been too hasty in approving

leveraged funds tied to some of the country's best-known chip

stocks, which were introduced last month and have contributed to

heightened volatility.

Regulators recently cautioned retail investors against the use

of leverage on the KOSPI, as margin debt, or borrowing to buy

stocks, rose to a record high in June.

The KOSPI has risen 94.67% so far this year while the won

has weakened 6.5% against the dollar.

In money and debt markets, September futures on three-year

treasury bonds gained 0.14 point to 103.01.

The most liquid three-year Korean treasury bond yield

fell by 3.1 basis points to 3.772%, while the

benchmark 10-year yield fell by 1.8 bps to 4.179%.

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