Bank of Korea: Leverage ETFs, Chip Concentration Drove KOSPI Swings

Summary

On September 10, 2026, the Bank of Korea released its Monetary and Credit Policy Report, assessing that a surge in leveraged ETF investment and concentration in Samsung Electronics and SK hynix had amplified volatility in domestic stock prices. According to Yonhap News Agency, the key implication for investors is that they must look beyond the KOSPI’s direction and also track leveraged supply-demand (order flow) and the contribution of a small number of semiconductor companies driving index moves.

Leveraged ETFs are exchange-traded funds that magnify and track the movements of an underlying asset. Interpreting the Bank of Korea’s diagnosis based on Yonhap’s report, expectations of gains fueled leveraged investing and hedging trades, creating a structure in which subsequent position unwinding amplified moves in the opposite direction.

How the Bank of Korea Linked the KOSPI’s Volatility

According to Yonhap News Agency, the Bank of Korea said that as leveraged investment in domestic stocks increased, domestic cash and futures trading for hedging purposes also rose. The key point in this diagnosis is that ETF trading did not end within the product itself but was transmitted through cash and futures supply-demand (order flow).

Large-scale technical selling by foreign investors for profit-taking and portfolio rebalancing also worsened supply-demand (order flow) conditions. The Bank of Korea explained that retail investors’ borrowing-based investments likewise expanded and were later unwound, amplifying both upward and downward stock-price movements. According to Yonhap, the overlap of leveraged ETFs, foreign investors’ selling, and retail investors’ deleveraging in the same market created the channel through which volatility increased.

Two Semiconductor Companies Generated 99.0% of the KOSPI’s Gain

According to Yonhap News Agency, Samsung Electronics and SK hynix together accounted for 99.0% of the KOSPI’s rise during the period when the index climbed from 8,000 to 9,000. In the same KOSPI advance, Samsung Electronics contributed 44.7% and SK hynix 54.3%.

The concentration was also clear in the opposite direction. According to Yonhap, during the period when the KOSPI fell from 9,100 to 5,500, Samsung Electronics and SK hynix together accounted for 69.3% of the index’s decline, with Samsung Electronics contributing 29.8% and SK hynix 39.6%.

Interpreting Yonhap’s figures, it is difficult to view the KOSPI’s rise simply as a broad market move, and its decline is likewise difficult to assess separately from changes in the share prices of these two companies. Park Jong-woo, deputy governor of the Bank of Korea, also told Yonhap that expectations for the memory-semiconductor cycle had the greatest impact on stock-price volatility.

Supply-Demand Impact on Samsung Electronics and SK hynix

• Samsung Electronics: According to Yonhap News Agency, its contribution to the KOSPI’s rise from 8,000 to 9,000 was 44.7%, while its contribution to the decline from 9,100 to 5,500 was 29.8%. Based on the Bank of Korea’s analysis, KOSPI volatility can increase when changes in index-tracking and leveraged supply-demand (order flow) coincide with Samsung Electronics’ share-price movements.
• SK hynix: According to Yonhap, its contribution was 54.3% during the same KOSPI advance and 39.6% during the same decline. Based on Deputy Governor Park Jong-woo’s assessment, investors should also watch how SK hynix’s moves translate into index volatility when expectations for the memory-semiconductor cycle shift.
• KOSPI: According to Yonhap, Samsung Electronics and SK hynix together contributed 99.0% during the advance and 69.3% during the decline. In light of the Bank of Korea’s diagnosis, an index concentrated in a small number of companies is highly sensitive to changes in expectations for those companies and to leveraged supply-demand (order flow).

Two Scenarios: Semiconductor Expectations Hold or Leverage Positions Unwind

Bullish scenario: The Bank of Korea said major forecasting institutions expect the expansion of global AI investment to continue for a considerable period. Interpreting Yonhap’s report, if expectations for the memory-semiconductor cycle hold, Samsung Electronics and SK hynix could continue leading the KOSPI higher. However, the actual scale of increased global AI investment was not provided in the data.

Bearish scenario: According to the channel identified by the Bank of Korea, if expectations for the semiconductor cycle weaken, share-price moves in a small number of companies could be heavily reflected in the KOSPI, while the unwinding of leveraged positions and cash-and-futures hedging trades could amplify declines. Deputy Governor Park Jong-woo told Yonhap that although the size of leveraged ETFs has decreased, it is too early to be reassured and the situation must continue to be monitored.

Investor Checklist for Leveraged ETFs and Semiconductor Concentration

• Start by checking changes in leveraged ETFs and borrowed stock investments, which the Bank of Korea identified as short-term monitoring targets.
• Assess Samsung Electronics and SK hynix not only through company-specific factors but also by their contribution to the KOSPI.
• Watch for foreign investors’ profit-taking and portfolio-rebalancing selling occurring alongside the unwinding of retail investors’ borrowed positions.
• Over the medium to long term, monitor whether the Bank of Korea’s proposals to reduce market concentration and broaden the investor base take concrete shape.

Frequently Asked Questions

How much did leveraged ETF investment increase?

The provided data does not include an exact investment amount. The Bank of Korea assessed that the surge in investment had increased volatility but did not provide a figure, so there is no basis for estimating the amount arbitrarily.

Did the Bank of Korea forecast higher KOSPI volatility ahead?

The provided data does not state the future direction of stock-price volatility. What has been confirmed is the Bank of Korea’s proposal to strengthen monitoring of leveraged ETFs and borrowing-based investment and to pursue reduced market concentration and a broader investor base.

Was a detailed analysis of single-stock leveraged ETFs released?

The provided data does not allow confirmation of the Bank of Korea’s detailed analysis of single-stock leveraged ETFs. Therefore, there is no basis for concluding separately how individual products affect Samsung Electronics or SK hynix.

This article is automatically summarized and analyzed based on the original news report. View original article (news.kbs.co.kr)