South Korea’s Kospi has become the world’s best‑performing major equity market for a second year, driven by soaring demand for Samsung Electronics and SK Hynix AI chips. However, a rushed launch of single‑stock leveraged exchange‑traded funds (ETFs) offering two‑times daily returns has turned the market into what critics call a casino for retail investors.

President Lee Jae Myung ordered swift curbs after the index fell 25 % from its June peak and whipsawed — plunging 16 % on Monday, rebounding 6 % Wednesday, then dropping another 6 % Thursday. The exchange halted trading 37 times this year versus three in all of 2025, with more than half of the pauses occurring after the May debut of 16 leveraged and inverse ETFs. Single‑stock products now manage about $8bn, nearly half of all leveraged ETF assets.

Experts warn that the funds’ “short gamma” mechanics force aggressive rebalancing; Goldman Sachs estimated a $5bn forced sell‑off of SK Hynix on Monday, equal to 18 % of that day’s combined share and futures volume. Margin loans have surged to Won34.4tn, near a record Won38tn, inflicting heavy losses on retail traders.

In response, regulators will suspend new single‑stock leveraged ETF listings, triple the minimum deposit to Won30mn ($20,300) from 5 August, and mandate additional risk‑management training for retail participants.