South Korea's KOSPI plunged by 8%: the fifth trading halt in a month and a loss of $360 billion.
The South Korean stock market is experiencing a true collapse. The KOSPI index fell by more than 8% again today, marking the fifth forced trading halt in the past month. Over 400 trillion won, equivalent to $360 billion, has effectively "evaporated" from the market. Shares of key giants — Samsung and SK Hynix — each lost about 9%.
This is a continuation of a series of extreme movements. To recap: on June 8, the index fell by 8% within the first three minutes of the session, and on June 22–23, the decline reached 10% — the second worst day in KOSPI history. The cause at that time was a proposal to introduce a tax on unrealized profits. Now we are witnessing a systemic crisis, not an isolated failure.
Five Reasons for the Collapse: Structural Market Problems
1. Retail structure. The market is sustained by so-called "ants" — retail investors who operate on the principle of quick entry and even quicker exit. They turn every dip into a crash and every rebound into a sharp spike. Institutional investors are rare guests here.
2. Excessive concentration. Samsung and SK Hynix together account for 45–50% of KOSPI's market capitalization. For comparison, Nvidia and Apple in the S&P 500 weigh only 14%. Two stocks drive the market of an entire country — this is a colossal risk.
3. Record margin debt. It has reached 32.67 trillion won ($22.4 billion), increasing by 25% over the year. Leveraged ETFs on individual stocks of Samsung and SK Hynix, approved in May, double the daily movement. A 9% decline turns into an 18% loss for holders, triggering a cascade of forced sell-offs.
4. Vulnerability of the won (KRW). This is a "local" currency not held in global reserves. Sales by foreigners hit it harder than the dollar or euro. The won has already updated a 17-year low, increasing the cost of imports and limiting the Bank of Korea's ability to cut rates even amid the stock market collapse.
5. National Pension Service (NPS). The fund, whose assets equal 60% of the country's GDP, has exceeded the limit on the share of stocks in its portfolio. As a result, it is forced to sell on every rebound rather than buy the dips. It even sold on the day the trading halt was triggered. This destroyed the last market stabilizer.
Loss of the Bullish Scenario
An additional blow came at the end of June when Korea was not included in the MSCI watch list for an upgrade to developed market status. This deprived the market of the only catalyst for which foreign capital was willing to tolerate volatility.
As a result, KOSPI now fluctuates by 8–10% almost every day. Between crashes, the market rebounds just as sharply — in March, it rose by nearly 10% in a single day immediately after a record 12% drop. This is no longer a market, but a seesaw with an amplitude capable of destroying any portfolio.
My expert opinion: The South Korean market has fallen into a classic trap of structural fragility. When retail investors, margin debt, and the pension fund simultaneously work against stability, and the currency weakens — the only way out is a deep correction or an external lifeline. So far, none is in sight. Investors should reconsider their risks in the region.