Overview
- The Kospi fell sharply after a two-day selloff that dropped about 10.84% on Tuesday and 5.98% on Wednesday, erased a large share of gains since June and triggered market-wide circuit breakers.
- The government, led by Finance Minister Koo Yun Cheol, held an emergency meeting on July 29 and announced immediate and planned steps to stabilise markets while keeping surveillance at the highest alert level.
- Planned measures focus on restricting retail exposure to newly launched leveraged single-stock ETFs by setting limits as a share of investors’ portfolios, raising transaction costs and increasing margin or cash deposit requirements.
- Officials said they will seek a legal framework to allow emergency stabilisation actions and are weighing options that could involve institutional support from pension funds, including the National Pension Service, which press reports say bought significant Kospi exposure in July.
- The selloff was concentrated in AI and memory-chip leaders such as Samsung Electronics and SK Hynix, and authorities and analysts warn that the rapid roll-out of leveraged ETFs in May amplified forced selling; markets will watch regulatory details and upcoming earnings for further impact.