Home > Business > Finance

Korean stock markets face violent swings on outsized chipmaker caps

Published: 09 Feb. 2026, 19:05 Updated: 09 Feb. 2026, 19:20

The Kospi and Kosdaq indexes are shown on a screen in Hana Bank's trading room in central Seoul on Feb. 9. [YONHAP]

Korea’s stock market is experiencing its most violent swings in years, with the benchmark Kospi recording the highest volatility among major global markets amid heavy foreign selling and aggressive retail trading in chipmakers that dominate the index.

The Kospi rose 4.1 percent, or 211 points, to close at 5,298.04 on Monday, rebounding after sharp losses late last week. Gains in U.S. technology shares and a record high in Japan’s Nikkei 225 earlier in the day helped support sentiment.

Despite Monday’s rally, the index has whipsawed sharply this month, alternating between steep losses and gains almost every other session. On Friday, the Kospi briefly fell below the 4,900 level during intraday trading, marking a swing of more than 400 points in just two sessions. Market-wide trading curbs known as sidecars were triggered three times over the past five trading days.

Kospi leads major markets in volatility

An analysis by the JoongAng Ilbo of daily average volatility — measured by the standard deviation of daily price changes — showed the Kospi posted volatility of 4.82 percent from the start of the month through Friday, the highest among major global markets. Japan’s Nikkei ranked second at 2.26 percent.

By comparison, China’s Shanghai Composite recorded volatility of 1.48 percent, the Dow Jones Industrial Average 1.39 percent, Taiwan’s Taiex 1.36 percent, the S&P 500 1.29 percent and Hong Kong’s Hang Seng Index 1.08 percent. Even emerging markets typically viewed as more volatile showed smaller swings, with Indonesia’s market posting daily volatility of 2.76 percent between Feb. 2 and Friday.

Investor anxiety has also intensified. The Kospi Volatility Index, based on Kospi 200 options and often referred to as Korea’s fear gauge, climbed to 47.16 on Monday, up 38 percent from a month earlier. It briefly surged to 51.48 on Friday, its highest level in more than five years since the market turmoil during the Covid-19 pandemic in 2020. A reading above 40 is widely seen as signaling an elevated risk of sharp price swings.

Foreign sell, retail buy the dip

Analysts said the volatility reflects repeated cycles of heavy foreign selling whenever concerns emerge over a potential artificial intelligence bubble, particularly in U.S. technology stocks, followed by aggressive short-term buying by retail investors.

The closing stock prices for Samsung Electronics, SK hynix and Hyundai Motor are displayed next to the Kospi on Feb. 9. [NEWS1]

The impact has been magnified by the Kospi’s heavy concentration in chipmakers. Samsung Electronics and SK hynix together account for about 40 percent of the index’s total market capitalization, leaving the market highly sensitive to shifts in sentiment toward semiconductor stocks. Repeated cycles of foreign selling and retail short-term buying in heavyweight chip stocks could delay a correction in the Kospi, according to analysts.

Foreign investors sold a combined 10 trillion won ($6.8 billion) worth of the two companies' shares last week, unloading 5.06 trillion won of Samsung Electronics and 4.73 trillion won of SK hynix. That marked the largest weekly net selling on record for the two stocks combined.

Both shares rebounded sharply on Monday, rising 5 to 6 percent, after Nvidia CEO Jensen Huang said on Friday that AI infrastructure buildouts have "seven to eight years to go," pushing back against bubble concerns.

The scale of Korea’s market swings stands in contrast to Taiwan, where chipmaker TSMC dominates the index but daily volatility has remained near 1 percent.

Retail investors’ dominant role in trading has also contributed to sharper moves. Individual investors accounted for 67 percent of Kospi trading volume this year, with their share rising to 78 percent on the tech-heavy Kosdaq. In developed markets such as the United States, pension funds and other institutional investors typically play a larger role, helping to dampen short-term volatility.

Customers wait in line for consultations at a brokerage firm branch in Seoul on Jan. 26. [YONHAP]

Leverage has added to the risk. Outstanding margin loans — funds borrowed from brokerages to buy shares — hit a record 30.79 trillion won as of Thursday, up by about 10 trillion won in six months from around 21 trillion won in late August of last year. Such positions can trigger automatic forced selling during sharp market declines, amplifying reactions to external shocks.

"Since early February, the Kospi has shown extreme swings we haven’t seen before, driving volatility higher,” said Lee Kyung-min, a researcher at Daishin Securities. “After a rapid rise, fatigue has built up in the market, signs of overheating have intensified, earnings expectations have passed their peak, and external uncertainty has increased."

"With the index having surged sharply in a short period and valuation concerns still lingering, renewed anxiety over U.S. AI stocks has raised incentives for foreign investors to take profits, especially in semiconductor shares," said Han Ji-young, a researcher at Kiwoom Securities.

The local currency strengthened 9.2 won from the previous session to trade at 1,460.3 against the dollar at 3:30 p.m. on Monday.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys moved up 3.4 basis points to 3.27 percent, and the return on the benchmark five-year government bonds gained 3.4 basis points to 3.56 percent.

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.
BY JANG SEO-YUN [[email protected]]