A warning has emerged that South Korea’s stock market could be branded as an “uninvestable market” by global investors due to extreme volatility and immature policy responses. Bloomberg argues that the benefits of the artificial intelligence (AI) industry boom and low valuations alone are insufficient to justify optimism about a rebound in the KOSPI.
“Global asset managers have labeled China as uninvestable due to policy failures and disregard for investors. Unfortunately, similar concerns are now emerging for South Korea. Does the South Korean government know what it is doing? Are young investors, who are entering the market for the first time, being properly protected?”
2. How is this related to the sub
(1) AI boom and stock craze in Korea: Is Korean stock market becoming uninvestable because it’s high volatility and government failure to contain volatility?
3. My opinion
How the heck the government thinking when they allowed single-company leveraged ETF? That is causing chaos in the market. All the dopamine-addicted Gen Z who were on crypto are moving stock market and burning their money there. Did the government really think few personal finance courses set up at the military for conscripts was enough to teach young people of financial responsibility?
Otherwise_Young52201 on
No it isn’t. See my comment in the thread about developing countries benefiting more from AI than developed countries:
>>The trend has reversed in the past month as investor doubts about the speed of the AI investment boom have increased, with the Indian gauge up 12 per cent while the Korean market has fallen by about a fifth.
>This misdiagnoses why the Korean/American markets fell. The driving force behind both the Korean/American semiconductor stock losses was deleveraging from retailers that were largely investing with leveraged ETFs. In fact, because these leveraged retailers have mostly exited, the price gains in semiconductor stocks from now on should be more resilient.
Quote from the article:
>Now they’re dealing with monumental losses. The most popular SK Hynix leveraged ETF has lost as much as 84% of its value from the June peak. Many couldn’t just ride out the storm — an estimated 360,000 brokerage accounts were forcibly liquidated, with 62% of them held by individuals under 35. It’s understandable that Koreans are angry. Seoul encouraged excessive risk-taking from inexperienced traders when the global AI trade was near its peak.
So the author counteracts her own point. The KOSPI is still up 53.93% YTD, except now much of the leveraged bets are gone. So I repeat myself: price increases will now be more resilient.
2 Comments
1. Summary
A warning has emerged that South Korea’s stock market could be branded as an “uninvestable market” by global investors due to extreme volatility and immature policy responses. Bloomberg argues that the benefits of the artificial intelligence (AI) industry boom and low valuations alone are insufficient to justify optimism about a rebound in the KOSPI.
“Global asset managers have labeled China as uninvestable due to policy failures and disregard for investors. Unfortunately, similar concerns are now emerging for South Korea. Does the South Korean government know what it is doing? Are young investors, who are entering the market for the first time, being properly protected?”
2. How is this related to the sub
(1) AI boom and stock craze in Korea: Is Korean stock market becoming uninvestable because it’s high volatility and government failure to contain volatility?
3. My opinion
How the heck the government thinking when they allowed single-company leveraged ETF? That is causing chaos in the market. All the dopamine-addicted Gen Z who were on crypto are moving stock market and burning their money there. Did the government really think few personal finance courses set up at the military for conscripts was enough to teach young people of financial responsibility?
No it isn’t. See my comment in the thread about developing countries benefiting more from AI than developed countries:
>>The trend has reversed in the past month as investor doubts about the speed of the AI investment boom have increased, with the Indian gauge up 12 per cent while the Korean market has fallen by about a fifth.
>This misdiagnoses why the Korean/American markets fell. The driving force behind both the Korean/American semiconductor stock losses was deleveraging from retailers that were largely investing with leveraged ETFs. In fact, because these leveraged retailers have mostly exited, the price gains in semiconductor stocks from now on should be more resilient.
Quote from the article:
>Now they’re dealing with monumental losses. The most popular SK Hynix leveraged ETF has lost as much as 84% of its value from the June peak. Many couldn’t just ride out the storm — an estimated 360,000 brokerage accounts were forcibly liquidated, with 62% of them held by individuals under 35. It’s understandable that Koreans are angry. Seoul encouraged excessive risk-taking from inexperienced traders when the global AI trade was near its peak.
So the author counteracts her own point. The KOSPI is still up 53.93% YTD, except now much of the leveraged bets are gone. So I repeat myself: price increases will now be more resilient.