South Korea's Stock Market Volatility Surpasses Bitcoin
The South Korean stock market has been experiencing extreme volatility in recent days, surpassing even Bitcoin's volatility according to economist Steve Hanke. The Direxion Daily South Korea Bull 3X Shares (KORU), a leveraged exchange-traded fund tracking the MSCI Korea Index, rose nearly 8% overnight despite the KOSPI benchmark index dropping about 5%. This comes as investors grow weary of AI hype and non-sense.
Government efforts to channel household savings into domestic equities have fueled market volatility. Regulators fast-tracked the launch of leveraged ETFs tied to AI chipmakers, including Samsung Electronics and SK Hynix, which has driven a surge in trading activity but also increased market swings. The government's push has been met with criticism, with some accusing them of creating a 'gambling table'.
Analyst Lale Akoner notes that this is a textbook example of a crowded trade meeting leverage. She warns that further sharp swings are expected in technology and semiconductor stocks over the coming months. However, she also cautions against mistaking this for a wholesale collapse in the AI investment case.