What's behind South Korea's stock market whiplash

SOURCE NATIONAL ASSEMBLY Seoul - July 29, 2026 What's behind South Korea's stock market whiplash People abroad say it's 'Squid Game.' It has turned into a casino. Seoul Heesu Lee Bloomberg News on a roller coaster. Seoul Heesu Lee Bloomberg News South Korea's stock market has been on a roller coaster. Heesu Lee Bloomberg News After enjoying its run as the world's best-performing market this year, July brought a sharp reversal. Investors have endured a string of circuit breakers this year, each triggered by drops in the benchmark Kospi, which is down about 40% from its peak in June. Among the hardest hit were the country's retail investors. Many piled into leveraged ETFs during the rally, drawn by optimism around the country's tech giants, Samsung and SK Hynix. Leveraged ETFs can magnify potential gains, but it also means amplified losses during market downturns. After a painful two-day market rout that wiped billions from portfolios, Bloomberg South Korea Steps Up Leveraged ETF Curbs After Market Rout Heesu Lee & Jaehyun Eom | July 29, 2026 the government announced measures to curb retail access to leveraged ETFs, including caps on exposure and higher trading costs — all in an effort to reduce market volatility. But as investors nurse their losses, criticism is growing. SOURCE NATIONAL ASSEMBLY Seoul - July 29, 2026 Lee Jongwook People Power Party lawmaker When I think about it now, these products should have never been allowed onto the market. I consider this a policy failure. Earlier, the government had approved those products as part of a bid to encourage South Koreans to invest at home, rather than in the US or Hong Kong. Now, that strategy is under scrutiny, questions remain on how the new curbs will work in practice, and there are mounting calls for more accountability from the government, especially alongside President Lee Jae Myung's push to boost the Kospi and encourage more investment in domestic equities.