[Young journalist Yumin Chung] Regardless of the global AI boom, extreme market volatility combined with the government’s insufficient policy response is causing South Korea’s stock market to be ‘uninvestable’, according to the commentaries by Bloomberg. 
 
On August 4 (local time), Bloomberg columnist Shuli Ren published an article named "South Korea Is Becoming Uninvestable, Too." The column mentioned that the KOSPI fell approximately 40% from its June peak in just 27 trading days, describing the decline as comparable to China's 2015 stock market crash.

The article dismissed bullish arguments supported by the strong bases of companies including Samsung Electronics and SK Hynix plus the KOSPI's attractive forward P/E ratio of 5.5x. Instead, it argued that the government's impulsive attempts to support the market, along with heavy selling, imposed)trauma on retail investors and decried the stock market. 

“Extreme volatility” was chosen as the biggest challenge faced by South Korea’s stock market. This year, the KOSPI recorded 33 trading days with moves exceeding 5%, which is far more than other cases such as Japan's Nikkei 225 (4 days) and Hong Kong's Hang Seng Index (0 days). The column argued that this is the major cause of foreign institutional investors  retreating  from South Korea’s stock market, and especially emphasized the government's approval of single-stock leveraged ETFs in late May as the main driver. According to Goldman Sachs, ETF rebalancing flows accounted for 40% of SK Hynix's average daily trading volume when the stock moved 5%, significantly affecting market activity, at the June peak.  
 
Despite the government’s later efforts to tighten regulations through the raise of minimum margin requirements, the column noted that the products would still account for 17% of daily trading volume on days of significant market volatility if they aren’t deferred.

The article further pointed out that retail investors who had trusted government policy experienced significant losses. While the most popular SK Hynix leveraged ETF has fallen 84% from its peak, 62% of the 360,000 liquidated accounts belonged to investors aged 35 or younger. It also criticized the National Pension Service for raising its domestic equity allocation target, stating that it now fails to stabilize an overheating market, which was its traditional role.
 
The column lastly concluded that while global asset managers have long viewed China as "uninvestable" because of policy failures and depreciation for investors, they started to identify these problems from South Korea’s stock market too. It further emphasized that the government should reflect on whether it is doing good enough to protect its young investors from holding back their investments in the stock market.

▶원문 기사:"韓, 투자 부적합 국가 전락" 외신 경고…'변동성 극심' 주범은 (이코노미스트, 2026. 8. 4)
 

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