South Korean retail investors experienced substantial losses in July's Kospi market reversal. Many traders are now vowing to avoid the Korean stock market altogether. The market experienced record circuit-breaker suspensions, reflecting extreme volatility. Government-introduced leveraged ETFs are blamed for amplifying these wild market swings. This period saw a dramatic unraveling after months of prior market optimism.
Encouraged by President Lee Jae Myung's stock-market reform drive as well as the debut of single-stock leveraged ETFs offering the prospect of amplified gains, mom-and-pop traders piled about 78 trillion won ($54.2 billion) into Kospi shares over May and June, only to be sucker-punched by the index's wild swings in July.
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South Korean retail investors experienced substantial losses in July's Kospi market reversal. Many traders are now vowing to avoid the Korean stock market altogether. The market experienced record circuit-breaker suspensions, reflecting extreme volatility. Government-introduced leveraged ETFs are blamed for amplifying these wild market swings. This period saw a dramatic unraveling after months of prior market optimism.
South Korea’s retail traders have long built a reputation for embracing risk. Yet July’s punishing reversal in the Kospi has rattled even this battle-hardened cohort, exposing the limits of their tolerance for volatility.
