Korea's stock market is becoming a casino for one-day wagers
As wild swings grip the Kospi, retail investors are piling into leveraged ETFs and even 150-times leveraged products, raising alarms over speculation and investor protection.
The minute-to-minute fluctuation of the Kodex Samsung Electronics single-stock leveraged exchange-traded fund (ETF) is seen on a mobile device on May 27.NEWS1
Korea's stock market is increasingly resembling a casino, where retail investors placeshort-term wagers through leveraged exchange-traded funds (ETF) as volatility erodes the appeal of long-term investing.
"I feel like my life has been turned upside down because I'm constantly glued to the stock screen," said a job seeker surnamed Seo, who recently suffered a heavy loss after selling their gold to start leveraged trading.
"But I'm afraid that if I do nothing, I'll be left behind.”
An office worker surnamed Lee, who has recently gotten hooked on day trading — buying and selling stocks over short periods to capitalize on price swings — even believes that the strategy has become a way to cope with the market's extreme volatility.
"I know long-term investing is the right approach, but the market is moving so wildly that waiting feels too costly," Lee said. "Rather than sitting through a sharp decline, I figured out that I could at least earn enough each day to cover a meal when I trade more frequently. It makes me feel a little less anxious."
Investors are opting toward short-term trading as the Kospi fluctuates as much as 5 to 10 percent in a single session. The recent spike in volatility, which triggered circuit breakers twice last week alone, has rattled investors and eroded their willingness to hold positions through uncertainty.
Kospi closing at 8,203.84 is seen on a screen at Hana Bank's trading room in central Seoul on June 23.YONHAP
Some investors have likened the market to "a coin toss" or "a state-sanctioned casino." And trading data reflects the trend.
Last Friday, turnover in the Kodex SK hynix Single Stock Leverage ETF reached 108 percent. It means that the entire fund changed hands more than once over the course of a single trading day.
Turnover was even higher for products betting on a downturn.
The SOL SK Hynix Futures Single Stock Inverse 2X ETF recorded a turnover ratio of 1,261 percent the same day. The figure indicates that its entire volume traded more than 12 times in one day.
On the roller-coaster ride known as the Kospi, leveraged ETFs are increasingly being used as vehicles for betting on the index's daily direction.
Mirae Asset Securities hosts a seminar before listing chipmaker single-stock leveraged exchange traded fund (ETF) products in central Seoul on May 26.YONHAP
Market observers warn that the trend is creating a "tail wagging the dog" dynamic — as concentrated trading of chipmaker stocks fuels broader volatility.
More investors flock to leveraged products in search of quick profits as market volatility increases, gravitating particularly toward ETFs tied to semiconductor champions Samsung Electronics and SK hynix.
On Monday, the Kospi closed down 0.2 percent at 8,394.65. Foreign investors were net sellers of 7.76 trillion won ($5 billion), the largest daily net sale on record. It surpassed the previous high of 7.08 trillion won set on Feb. 27. Individual and institutional investors offset much of the selling, with net purchases of 4.6 trillion won and 2.93 trillion won, respectively.
The Vkospi, an index measuring expected 30-day volatility in the Kospi 200, rose 4.56 percent from the previous session to close at a record high of 96.94. The index is often referred to as Korea's "fear gauge.”
Audiences crowd the 2026 Investment Trend Fair held in southern Seoul on June 27.KIM GYEONG-JIN
Outside the regulated financial system, even riskier products have emerged.
Binance, the world's largest cryptocurrency exchange, listed a futures product last Friday that offers up to 150-times leverage on the Kospi. A decline of just 0.66 percent would be enough to wipe out an investor's entire input.
The product attracted more than 1 trillion won in trading volume soon after its launch, with much of the activity believed to have come from Korean investors, according to securities industry sources.
Binance also offers products providing up to 50-times leverage on Samsung Electronics and SK hynix.
"A wrong bet on market direction in a highly volatile market can erase most of an investor's capital in a single day,” said Lee Hyo-seob, a senior research fellow at the Korea Capital Market Institute. “Even when prices remain largely unchanged, the negative compounding effect can still cause leveraged products to lose value."
Lee also called for stronger investor protections.
"The current investor education process for leveraged products is largely perfunctory and needs to be strengthened,” Lee said. “There should also be safeguards to stop investors from simply checking the 'high-risk' box despite having a lower risk profile [that determines eligible products for purchase].”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
