Crushed by Kospi rout, angry South Koreans rip government and vow not to buy
South Korean retail traders, known for risk-taking, were severely impacted by a 22% drop in the Kospi index in July, leading to record circuit-breaker suspensions and widespread frustration. Many blame the government's stock-market reforms and the introduction of leveraged ETFs for amplifying volatility and their losses.
Why it matters
This event highlights the risks of speculative investing, the impact of government financial policies on retail investors, and potential instability in emerging markets, potentially affecting broader economic confidence in South Korea.
Trading in Kospi stocks was halted four times during the month, a record run for circuit-breaker suspensions.
Listen SEOUL – South Korea’s retail traders have long built a reputation for embracing risk. Yet, July’s punishing reversal in the Kospi has rattled even this battle-hardened cohort, exposing the limits of their tolerance for volatility.
Some, like Kim Han-kyung, a Seoul resident in her late 30s, have resolved never to invest again, while others are comparing the US$3.9 trillion (S$5 trillion) market to a casino.
Retail investors sold a record amount of Kospi shares on July 31 despite a stunning 18 per cent rebound. The gauge still capped a 22 per cent loss for the month, the steepest since the global financial crisis.
Signs of frustration are everywhere on social media, with much of the blame being directed at the government.
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