The volatility of South Korea's KOSPI index exceeds that of Bitcoin, and the size of leveraged ETFs increases dramatically, posing significant risks

According to Bloomberg, the volatility of South Korea's KOSPI index has exceeded 60% this year, higher than Bitcoin. As of mid July this year, the Korean stock exchange has triggered seven circuit breakers. Samsung Electronics and SK Hynix together account for over 50% of the weight of the KOSPI index, and the index's performance is highly dependent on a few large chip stocks. The assets of South Korean leveraged ETFs have increased from $5 billion at the beginning of the year to over $40 billion, and related products, along with Samsung Electronics and SK Hynix, account for over 70% of the daily trading volume of the South Korean stock market. South Korean regulatory authorities suspended the listing of new single stock leveraged products on July 16th. This year, individual investors in South Korea invested over 10 trillion Korean won in KOSPI stocks, while foreign investors sold approximately 108 billion US dollars net during the same period, including withdrawing over 40 billion US dollars from SK Hynix. Goldman Sachs believes that leveraged ETFs are the main risk in the Korean market.