Alarm spread among top officials last week as the benchmark Kospi index plunged some 40% from its peak a month earlier, according to people familiar with the matter. President Lee Jae Myung, stuck halfway around the world on an 11‑day diplomatic tour, and much of his key staff watched and searched for ways to stem the market meltdown from afar. Finance Minister Koo Yun Cheol apologized to irate lawmakers and called an emergency meeting of key economic policymakers, which included Bank of Korea Governor Shin Hyun Song and a top representative from the presidential office. The gathering led to a slew of measures to curb retail investments in leveraged exchange‑traded funds, helping the market soar almost 18% on Friday—its biggest gain ever.

The volatility stems from the aggressive promotion of single‑stock leveraged ETFs tied to Samsung Electronics and SK Hynix, which together account for over half of the Kospi’s market value. Retail investors, not professionals, now dominate these products, prompting criticism from Jung Eui‑jung, head of the Korean Stockholders’ Alliance, who says the government created the risk it now seeks to contain.

Lee, a former day trader who pledged to push the Kospi past 5,000, has encouraged equity investment to ease housing pressure. Despite early gains, the index’s wild swings—32 days of >5% moves—have threatened his popularity and policy agenda. His office says it is closely monitoring and preparing additional steps.

Lawmakers questioned whether fast‑tracked ETF approvals outpaced safeguards, especially before the June local election. The political fallout may complicate Lee’s ambitious revenue and infrastructure plans, as investors lament the “blood on the street.”