Korean Stock Volatility Surpasses Bitcoin as Samsung, SK Hynix Concentration Fuels Swings

Volatility in South Korea's stock market has surpassed that of Bitcoin, according to a Bloomberg analysis.

Bloomberg reported on July 20 that the Kospi Index's volatility has risen above 60% this year, about double that of Japan's Nikkei 225. That is also higher than Bitcoin, an asset known for sharp price swings.

The Korea Exchange has triggered circuit breakers seven times this year through mid-July as market turbulence intensified. There were no such cases in 2025 and only one in 2024.

Bloomberg pointed to the Kospi's heavy concentration in Samsung Electronics Co. and SK Hynix Inc. as a main driver of the volatility. Surging demand for memory chips used in artificial intelligence systems has lifted both companies' earnings and share prices, and the two stocks now account for more than 50% of the index. Their weight rises further when listed affiliates are included.

That has left funds tracking the Kospi effectively tied to moves in AI and semiconductor stocks. On the day the Kospi closed at a record high in late June, more than 650 of its 831 constituents still declined.

Rising investment in leveraged exchange-traded funds has also added to the volatility. Leveraged ETFs typically use derivatives and borrowing to deliver about twice the daily return of an underlying index or asset.

In South Korea, the market has grown since Samsung Asset Management launched KODEX Leverage in 2010, a product designed to deliver twice the daily return of the Kospi 200. More than 10 leveraged products tied to individual stocks such as Samsung Electronics and SK Hynix were launched this year, and retail investors hold about 90% of them.

Authorities decided on July 16 to temporarily suspend new listings of leveraged products tied to individual stocks as concerns over market volatility mounted.

Bloomberg said Samsung Electronics, SK Hynix and ETFs tracking the two companies have recently accounted for more than 70% of total daily turnover on South Korea's stock market, which has a market capitalization of about $4 trillion. As global enthusiasm for AI investment has cooled, those leveraged products are now trading below their launch prices.

Retail money has continued to pour in. Domestic individual investors have put more than $100 billion into Kospi stocks this year. Foreign investors, meanwhile, were net sellers of about $108 billion worth of Kospi stocks this year as they reduced portfolio concentration in Samsung Electronics and SK Hynix. More than $40 billion flowed out of SK Hynix alone.

Goldman Sachs said assets invested in South Korea's index and single-stock leveraged ETFs surged from $5 billion at the start of the year to more than $40 billion at the end of June. In a July 5 report, the bank's strategists described leveraged ETFs as a key risk factor to watch.

Margin loans for stock purchases have declined somewhat since peaking in June, but remain above levels from a year earlier.

Gary Tan, a portfolio manager at Allspring Global Investments, said leverage was a key driver of second-quarter gains in memory-chip stocks. He remains cautious about calling a bottom.