South Korea Increases Market Monitoring Amid Rising Stock Volatility and Semiconductor Risk

SEOUL — South Korea’s finance minister agreed Wednesday with economic policymakers to closely monitor risk factors that could amplify stock market volatility, according to the ministry.

Market volatility has increased due to foreign and institutional profit-taking, portfolio rebalancing, and shifting expectations for the global AI sector, the ministry said in a statement following meetings between Minister Koo Yun Cheol, the central bank governor, and financial regulators.

The Kospi dropped as much as 4% in early trade to its lowest level since May 20, before recovering to rise 0.5% as of 0052 GMT, supported by a rebound in chipmaker shares. However, the index remained down 15.6% from its June 22 record peak.

This week, the benchmark index triggered a circuit breaker for the sixth time this year and the 12th in history, driven by sharp swings in heavyweight semiconductor stocks including Samsung Electronics and SK Hynix.

“The growing concentration in the semiconductor sector is contributing to financial market volatility, as chip sector fluctuations increasingly impact the broader market,” the ministry said, echoing regulator warnings.

The Financial Supervisory Service announced Tuesday it would monitor the effects of newly introduced single-stock leveraged ETFs tied to semiconductor stocks and review marketing practices by asset managers if necessary.

The Bank of Korea said Sunday it would coordinate with other agencies to address related risks, warning that single-stock leveraged ETFs can amplify one-sided trading, increase concentration in specific stocks, and worsen market volatility.

REUTERS

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