South Korea Vows Close Monitoring of Stock Market Volatility Risks

SEOUL (July 8): South Korea’s finance minister and economic policymakers agreed on Wednesday to closely monitor risk factors contributing to heightened stock market volatility, according to a ministry statement following a meeting with the central bank governor and financial regulators.

Recent market turbulence, driven by foreign and institutional profit-taking, portfolio adjustments, and evolving expectations for the global AI sector, has elevated volatility levels. The KOSPI dropped as much as 4% early in the day to its lowest point since May 20 before recovering on gains in chipmaker stocks. The index rose 0.5% as of 0052 GMT but remained 15.6% below its record high set on June 22.

The index activated a circuit breaker for the sixth time this year and the 12th in its history, as sharp fluctuations in major semiconductor stocks like Samsung Electronics and SK Hynix intensified market swings. Officials noted that rising concentration in the semiconductor sector has increased the chip industry’s influence on broader market volatility.

The Financial Supervisory Service announced Tuesday it would assess the market effects of newly launched single-stock leveraged ETFs tied to chipmakers and evaluate asset management firms’ marketing strategies if necessary. The Bank of Korea also pledged coordination with relevant agencies, cautioning that leveraged ETFs may magnify one-sided trading, deepen stock concentration, and worsen volatility.

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