South Korea’s stock market, which had seen a record run driven by an AI-fuelled surge, has now plunged into a bear market. The KOSPI has shed a quarter of its value since late June, yet remains the world’s best-performing major equity market this year.
Volatility in the Market
The market’s volatility has been fueled by margin debt, concentrated in just two stocks, Samsung Electronics and SK Hynix, which together now account for just over half of the KOSPI. This has left regulators wary and investors exposed to violent swings.
Despite the volatility, forecast profits at Samsung and SK Hynix have risen sharply, with forward price-to-earnings ratios actually falling this year despite share prices more than doubling. However, some seasoned investors are staying away, citing the market’s rapid rise and the risks of leveraged investments.
Regulatory Response
South Korea’s Financial Supervisory Service has said it will monitor the products and investigate excessive marketing, if needed. The Bank of Korea is also watching whether single-stock ETFs could distort markets and increase volatility.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
