Kosdaq index rose over 30% after leveraged ETFs shifted focus to small caps. South Korea’s small-cap stocks gained momentum as restrictions on leveraged exchanged-traded funds tracking chipmakers redirected investments. The Kosdaq jumped 6.8% on Monday, reversing losses from July 30. The Korea Exchange halted program buying due to surging futures, marking the third intervention this month. This shift highlights renewed investor interest in smaller firms amid broader market trends.

Leveraged ETFs had previously dominated liquidity in larger-cap sectors, particularly chipmakers. Their reduced activity allowed capital to flow into Kosdaq-listed companies. The index’s rally reflects a broader rotation strategy, where investors seek higher growth potential in smaller firms. Analysts note this trend could persist if ETF restrictions remain in place.

The Korea Exchange’s interventions underscore market volatility. Rapid futures gains forced pauses to stabilize trading. While the 30% surge is significant, sustainability depends on continued ETF rotation and broader economic conditions. Investors are monitoring how this shift impacts long-term small-cap performance.