The South Korean ETF market experienced a broad decline. At the time of writing, the CSOP 2x Leveraged SK Hynix ETF (07709) fell 10.19% to HKD 119. The CSOP 2x Leveraged Samsung Electronics ETF (07747) dropped 6.89% to HKD 200, while the TR Korea ETF (02848) declined 4.86% to HKD 1,937.
Catalyst for the Market Drop
The sell-off followed a sharp opening plunge in the South Korean stock market on June 5th. The benchmark KOSPI Index fell as much as 6% at one point, triggering a circuit breaker mechanism. The Korea Exchange halted program trading for five minutes after the KOSPI 200 futures index dropped 5%.
Individual Stock Performance
Major index constituents were hit hard. Shares of SK Hynix dropped over 9% intraday, while Samsung Electronics fell more than 7%. The downturn was partly attributed to a slight revenue miss from Broadcom's latest earnings report, which cast a shadow over the AI investment boom that had been fueling market gains.
Market Concentration and Official Response
Data from the Korea Exchange highlights the market's heavy reliance on these two chip giants. Benefiting from AI-driven chip demand, Samsung Electronics and SK Hynix together account for 54% of the KOSPI index's weighting and represented roughly half of the index's average daily trading volume in May.
Ahead of the volatility, South Korean financial authorities had signaled strong intentions to stabilize markets. Finance Minister Joo Yeol had stated that the government would take immediate measures if necessary to counter excessive fluctuations in the foreign exchange market. He also expressed concern over risks in the stock and bond markets, specifically worrying about leveraged stock trading and aiming to prevent a "herd effect" from amplifying market swings.
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