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South Korea's benchmark KOSPI stock index plunged 9.99% to 8,203.84 on Tuesday, triggering a market-wide trading halt in its steepest decline since March 4. Samsung Electronics and SK Hynix each lost more than 12% as overseas investors retreated from the semiconductor shares that had carried the index to a record above 9,100 points just a day earlier.
Bitcoin fell in parallel, dropping as much as $1,500 within hours and slipping below $63,000 to trade near $62,300 after touching an intraday low around $62,000. CoinGlass data showed roughly $190 million in crypto positions liquidated within a single hour, with long traders accounting for about $184 million of that total, while 24-hour liquidations climbed to approximately $714 million. Bitcoin traders alone absorbed about $215 million in forced closures.
Why it matters
The KOSPI rout followed a rare admission from Financial Supervisory Service Governor Lee Chan-jin, who said on June 22 that authorities had acted too quickly in approving leveraged ETFs tracking Samsung and SK Hynix. Sixteen such funds launched in late May with about $3 billion in assets and grew to more than $9 billion, with retail investors holding roughly 92% of ownership. Goldman Sachs had estimated before launch that a 5% swing in Korean stocks could generate around $4.7 billion of dealer rebalancing flows, equivalent to about one-eighth of normal daily share turnover, a flow that rebalanced violently on the way down.
South Korean retail debt tied to the equity rally reached about 60 trillion won ($39 billion) by the end of May, leaving margin calls and forced selling as accelerants once prices turned. The FSS is now weighing stabilization measures, though Lee did not specify whether they include leverage caps, tighter eligibility rules, or product restrictions.
Market impact
The KOSPI's collapse reflected structural concentration as much as sentiment. Samsung and SK Hynix together account for more than half the index's market value, tying the benchmark to expectations for AI servers and high-bandwidth memory chips, the same trade that had lifted the index nearly 95% year-to-date.
Frequently asked questions
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Why did the KOSPI fall 10% in a single day?
Samsung Electronics and SK Hynix, which together make up more than half the KOSPI's market value, dropped more than 12% each as foreign investors cut exposure. An automatic 20-minute trading halt kicked in after the index plunged 9.99% to 8,203.84.
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What did South Korea's regulator say about leveraged ETFs?
Financial Supervisory Service Governor Lee Chan-jin said on June 22 that authorities had acted too quickly in approving leveraged ETFs tracking Samsung and SK Hynix, and that the products had done little to stabilize the won.
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How much did Bitcoin fall and what drove the decline?
Bitcoin dropped as much as $1,500 within hours, slipping below $63,000 to trade near $62,300. CoinGlass reported roughly $714M in 24-hour liquidations, with longs making up the vast majority, on top of a $6.35B 30-day net outflow from US-listed spot BTC ETFs.
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Why are leveraged ETFs blamed for amplifying the rout?
Leveraged ETFs must rebalance daily to maintain target exposure, which can reinforce market moves. Goldman Sachs estimated a 5% swing in Korean stocks could generate about $4.7B in dealer rebalancing flows, roughly one-eighth of normal daily turnover.
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How exposed were South Korean retail investors to the rally?
Borrowed retail investment tied to the KOSPI rally reached about 60 trillion won ($39B) by the end of May, raising the risk of margin calls and forced selling once prices turned. The 16 leveraged Samsung and SK Hynix ETFs held roughly 92% retail ownership.
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