Kim Yong-beom Says FSC, FSS to Examine South Korea Stock-Market Volatility

Kim Yong-beom, President Lee Jae-myung’s chief policy secretary, said South Korea’s financial authorities will examine the recent increase in stock-market volatility.

The Financial Services Commission and the Financial Supervisory Service will review the issue, Kim told reporters at a press center in Sao Paulo on July 29 while accompanying Lee on a state visit to Brazil.

The review should cover overall market conditions, not just leveraged exchange-traded funds, he added.

Kim said the recent increase in volatility was not limited to South Korea, noting that major swings had appeared in other markets over the past two to three months.

He attributed part of the moves to an ongoing debate over the outlook for semiconductor and artificial-intelligence stocks. Investors are questioning not only the direction of AI and chip shares, but also whether heavy AI investment will translate into profits.

Kim also cited the rise of Chinese companies as an external factor. He pointed to the successful Shanghai listing of ChangXin Memory Technologies, or CXMT, China’s largest DRAM maker. He also mentioned the development of deep ultraviolet lithography equipment by a Chinese state-owned company.

With CXMT gaining ground, questions could emerge over whether South Korea’s two memory leaders, Samsung Electronics and SK Hynix, can maintain a safe competitive gap, Kim said.

He said the pattern resembled the earlier DeepSeek shock. Even after taking global market trends and China-related factors into account, volatility in South Korea’s stock market still stands out.

“If the core move is 10 elsewhere, it shows up as 20 to 30 in South Korea,” Kim said. “That is partly amplified by the characteristics of our market.”

Leveraged ETFs alone do not explain the phenomenon, he said. While they may make the moves look more pronounced, South Korea also needs to take a serious look at the large share of derivatives in its market and the composition of its investor base.

Kim said the debate over semiconductors and AI could flare up several more times even after the current round ends.

Still, he said AI demand itself should remain solid. China’s advances, including those by CXMT, should serve as a message that South Korea needs to invest more aggressively and step up research and development, including at its two major memory-chip makers, he added.

Han Kyung-woo, Hankyung.com reporter case@hankyung.com