The Korea Times

Leveraged ETFs and the 'Korea discount'

Korean retail investors are in the global spotlight due to volatility stemming from the potent mix of the semiconductor sector boom and leveraged exchange-traded funds (ETFs). After breaking the 9,000 index mark, Korea’s main bourse KOSPI has now corrected to 6,000, causing much angst among retail investors, with losses likely to be much greater for those invested in leveraged ETFs. Right on cue, China delivered another “DeepSeek moment” when Chinese startup company Moonshot revealed a model that claims to be on par with recent models from OpenAI and Anthropic. Just as sentiment on artificial intelligence (AI) is fading (for the time being), the news is likely to cast further uncertainty over the entire AI sector and, in turn, the semiconductor-heavy Korean stock market. Korean regulators have unintentionally let a genie out of the bottle by introducing single-stock leveraged ETFs, causing the steroids-induced volatility. Previously, leveraged ETFs tracking the broader KOSPI were available, which were much less volatile. The extreme volatility has prompted Korean regulators to a

Jul 20, 2026By Peter S. Kim

Peter S. Kim

The greed and fear of KOSPI 8000

As the Korean stock market roars past the once-mythical KOSPI index of 8,000, Korean investors are facing the classic investor dilemma: greed versus fear. More than half of the Korean population reportedly has a stock brokerage account, the highest level ever. For those already holding stocks or exchange-traded funds (ETFs), greed is setting in, with the temptation to buy more. For the other unfortunate half, the fear of jumping into the market at its current dizzying level would be frightening, and the loneliest feelings in a herd-driven society. The history of the Korean stock market is littered with extreme cycles of boom and bust, often marked by retail exuberance, as we are seeing today. With each market bubble peak, there are theories that “this time is different.” There is never a better time than now to identify the factors that are indeed different from those that have not changed at all over time. By now, international investors are aware of the power of Korean retail investors, given their traditionally massive underweight position in equities. Normally, the Korean bull

Jun 3, 2026By Peter S. Kim

Peter S. Kim

Iran and the Korean stock market

Since the COVID-19 pandemic, we have seen many forms of geopolitical risks rise, only for the stock market to shake them off and go for another rally. The Russia-Ukraine war and the Israel-Hamas conflict were all met with shrugs, likely spurring the U.S. Donald Trump administration to initiate a seemingly reckless and ill-informed attack on Iran. The Iran war comes at a time when the market was already bracing for a challenging year, with tariff tensions and growing concerns of an asset bubble. Korean retail investors have been on a multiyear love affair with U.S. stocks, centered on the “Magnificent Seven,” of which they collectively own more than $150 billion in shares. However, the S&P index has underperformed Asian equities for more than 12 months, and signs of fatigue across equities are shaking the foundation of many investors' bullish thesis. Nearly two years ago, I called for global equities to see one of the most powerful asset bubbles on record. My positive thesis was based on a potent combination of an eagerly dovish monetary policy, unwavering fiscal spending and finan

Mar 31, 2026By Peter S. Kim

Peter S. Kim

Selling your home for chips?

As the Korean stock market settles into the new era of KOSPI 5,000, President Lee Jae Myung and his administration are riding high on the success of their revitalization efforts. Just over six months ago, Lee began his term with a bold vision for the benchmark KOSPI, which many dismissed as just another pipe dream from an incoming president feeling high on an election win. Even Lee himself must be marveling now at the world-beating achievements of the index, which was one of the best performers over the last year. Clearly brimming with confidence, the Lee administration has recently pledged to shift its focus to tackling the residential property market with similar vigor. It announced a series of taxes targeting homeowners with multiple properties. Compared to the stock market reform, policies surrounding the Korean property market are fraught with dangers that could have unintended yet severe consequences for the Korean economy. The Korean press continues to celebrate the “money move,” which describes the shift of funds from low-yielding deposits into brokerage accounts as the pri

Feb 11, 2026By Peter S. Kim

Peter S. Kim

Korea’s 'money move'

As the Korean stock market roars on, approaching what seemed like the fantasy goal of KOSPI 5,000, local press is singing the power of the “money move.” The term describes the funds moving into the stock market and driving the surge. The current bull market has many drivers, including artificial intelligence (AI) and global liquidity. Market reform efforts by the Korean government have also played a large role. Most powerfully, these catalysts are receiving a turbo boost from Korean retail investors’ desperate search for alternatives to residential property as a main wealth creator. As the KOSPI continues its spectacular rise, Korean retail investors are finally showing the kind of spirit last seen before the subprime crisis. Since the end of 2024, Korean retail customer deposits for stock trading have increased by 33 trillion won ($22.3 billion), rising to nearly 90 trillion won. This represents a 61 percent increase from the end of 2024, and the pace is accelerating. This level of retail excitement will naturally raise concern among seasoned investors, many of whom consider Kor

Jan 28, 2026By Peter S. Kim

Peter S. Kim

Looking ahead at 2026 stock market

As we close out one of the most eventful years on record, the Korean stock market’s historic performance begs the question: How sustainable is this outperformance? Earlier this month, the Korean government lowered the dividend income tax from the high-end bracket of 49 to 25 percent. This move is the first step to ushering in a dividend culture and encouraging Korean retail investors to embrace a long-term buy-and-hold investment approach. Last year, I identified three fundamental shifts that led to my call for a KOSPI rally driven by an unprecedented market reform initiative. First, U.S. President Donald Trump's tariff war has heightened Koreans' sense of urgency for unity against external pressures; having its exporters threatened would force Koreans to prioritize economic growth over the social agenda. Second, for the Korean government, the stock market has become the second most visible barometer of public wealth creation and financial well-being (after the residential property market), as the number of brokerage accounts held by Koreans surpasses historical levels. Third, Korean

Dec 16, 2025By Peter S. Kim

Peter S. Kim

Gaming, gambling and stock trading

The Korean stock market is leading a worldwide bull market with returns of more than 50 percent so far this year, which makes it the best performer in Asia, surpassing even China. Many are calling for a global "everything rally," where historically uncorrelated assets, such as equities, bonds, commodities and even cryptocurrencies, are rising together at a fierce pace. Significant investor attention has been on how President Trump is unleashing "animal spirits" with his call for aggressive rate cuts, fiscal stimulus, and deregulation. However, there is another reason for the bull market: Rising participation of retail investors, unleashed by the COVID pandemic, has made stock markets resemble online casinos. As investors question the sustainability of the Korean stock market's performance next year, it is helpful to understand the changing dynamics of stock markets around the world, led by Korean retail investors. For decades, the U.S. has led the world in ownership of stocks as a part of household assets. The introduction of 401(k) plans in 1978 set off a decades-long bull market in

Nov 4, 2025By Peter S. Kim

Peter S. Kim

KOSPI 5,000 reality check

Recently, I hosted more than a hundred foreign investors at a conference held by KB Securities. The hottest topic of discussion centered on the reality check of achieving a stock market index of 5,000 points, a goal declared by President Lee Jae Myung. After the martial law incident, Korean investors, both institutional and individual, have rallied behind Korea's stock market, surprising foreign investors. President Lee has been instrumental in boosting "animal spirits" with his promise to revamp Korean capital markets for the greater public's benefit. Lee's previous left-wing affiliation seems hardly recognizable as his policy promises are those typically associated with a market-friendly right-wing president. Local investors have not only welcomed this initiative, they are excited about the potential of the ruling party being empowered with a legislative majority. This is evidenced by the impressive rise in KOSPI year-to-date, making it the best-performing market in Asia. President Lee has not only maintained the momentum behind the Corporate Value-up Program (CVP), which was a right

Sep 8, 2025By Peter S. Kim

Peter S. Kim

Korea-US tariff deal reached — now for main event

Last week, South Korea and the U.S. finally agreed on a tariff deal that will see the U.S. impose 15 percent tariffs on all Korean imports, whereas American products will not be charged a tariff. U.S. President Donald Trump said on social media that South Korea pledged $350 billion for investments "owned and controlled" by the U.S. and a further $100 billion in energy purchases from the U.S. The 15 percent is in line with recent U.S. agreements with the EU and Japan. The Korean stock market gave a lukewarm response, likely due to the high base effect from a strong performance for the Korean market, and also because global markets in general have already rallied hard since President Trump's "Liberation Day" market panic. There was visible disappointment that hopes for achieving something better than the EU and Japan were unfulfilled. Despite all the fanfare for the past months about how major chaebols such as Samsung and Hyundai lobbied hard and publicly for U.S. concessions, the final result was, frankly, anticlimactic. As we have seen many times this year, there is no guarantee that T

Aug 3, 2025By Peter S. Kim

Korea-US tariff deal reached — now for main event

Peter S. Kim

Where is Korea's tech future?

Leading up to the June presidential election, Korea's main bourse, the KOSPI index, was already one of the best-performing markets in Asia. Following President Lee Jae Myung's win, the KOSPI has experienced a melt-up-type market reaction, raising concerns about overheating. In particular, investor fervor is fueled by the new government's push for artificial intelligence (AI) and stablecoins, bringing impressive and sustained gains in related stocks within a couple of weeks. As investors with decades of experience learn, stock prices repeatedly swing between the hopes and the reality of a particular theme. Only a few weeks into the new administration, it would seem investors are already pricing in best-case hopes for the Korean tech sector, which has a long road ahead before proving itself in the intense battle for AI supremacy. China's last decade of pursuing tech ascendency offers living proof of how difficult that mission can be. The KOSPI rally has been a surprise for several reasons. First, there has been no discernible upgrade in macro or corporate fundamentals driving the booming

Jul 2, 2025By Peter S. Kim

Peter S. Kim

Leveraged ETFs and the 'Korea discount'

The greed and fear of KOSPI 8000

Iran and the Korean stock market

Selling your home for chips?

Korea’s 'money move'

Looking ahead at 2026 stock market

Gaming, gambling and stock trading

KOSPI 5,000 reality check

Korea-US tariff deal reached — now for main event

Where is Korea's tech future?

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