Market News

(Bloomberg) -- The volatility in South Korea's benchmark equity index has become so extreme that investors and analysts are likening the market's surging intra-day swings to the meme-stock frenzy.

While the comparison may at first sound exaggerated given the Kospi is supported by robust earnings from world-leading chipmakers, it's not without merit. Escalating interest from retail investors has seen the equity benchmark close up or down by at least 5% on 20 occasions this year — including a 10% plunge on Tuesday — up from just two in 2025. That's reminiscent of the fervor that surrounded shares such as GameStop Corp. and Bed Bath & Beyond Inc. in 2021 when they became the target of a retail-driven frenzy.

A big contributor to the jump in volatility has been the booming retail buying of leveraged single-stock exchange-traded funds. It's also being driven higher by the increasing dominance of the two biggest stocks: Samsung Electronics Co. and SK Hynix Inc., which now account for nearly 60% of the Kospi's total market capitalization.

"The Kospi in 2026 is starting to trade with meme-like muscle," said Hebe Chen, a market analyst at Vantage Global Prime in Sydney. "With Samsung and SK Hynix carrying outsized influence, and leveraged products mechanically amplifying every move in a market with too few obvious targets for that money to chase, each swing in AI sentiment can quickly become an index-level event."

The Kospi has ridden the wave of volatility to more than double this year, making it the world's best performing major equity index. The increase in intraday swings has seen Korea Exchange's circuit breaker triggered four times already this year, nearly half of the 10 episodes that have taken place since 2000. The Kospi 200 Volatility Index has jumped to record levels, implying daily moves of about 6% in the underlying gauge, according to data compiled by Bloomberg.

The meme-stock frenzy began in early 2021 when investors on social media forums such as Reddit combined to invest heavily in a number of specific US-listed companies such as GameStop, largely ignoring their corporate fundamentals or valuations. One of their aims was to push up equity prices enough to trigger a short squeeze, which would propel share prices even higher.