South Korea’s KOSPI Rebounds 0.97% on Chip Gains Ahead of Nvidia Earnings

South Korea’s benchmark KOSPI index rose 0.97% to 6,808.21 on Wednesday, August 26, as semiconductor stocks advanced ahead of Nvidia’s earnings report. The rebound marks a fragile recovery for a market that lost $2.5 trillion in value over six weeks in June and July. Samsung Electronics gained 1.95% and SK Hynix rose 0.72%, buoyed by overnight rallies in US chip stocks. However, leveraged ETF outflows and heavy retail investor losses underscore the market’s underlying weakness.

How the KOSPI became the world’s most volatile market

South Korea’s stock market surged 76% in 2025, the world’s best performance, as Samsung and SK Hynix rode the AI boom. By mid-2026, these two stocks accounted for more than half the KOSPI’s market capitalization. In May 2026, regulators approved single-stock leveraged ETFs tied to Samsung and SK Hynix, products designed to move twice the daily percentage change of each stock. Retail investors, who drive 60 to 70% of daily KOSPI trading volume, poured an estimated $54 billion into these leveraged funds within two months.

The crash: $2.5 trillion erased in six weeks

When concerns about AI demand and Chinese competition hit chip stocks in June, the concentrated market amplified losses. Over six weeks in June and July, the KOSPI fell nearly 40%. Samsung dropped 21.5% in July alone, while SK Hynix plunged 35.5%. The crash wiped out roughly $2.5 trillion in market value, according to analysis of the leverage effect. Inside two times leveraged ETFs, daily compounding of losses magnified the damage far beyond simple arithmetic.

Retail investors flee leveraged ETFs as outflows accelerate

Leveraged ETFs tied to Samsung and SK Hynix suffered nearly $1 billion in outflows in August, marking their first monthly withdrawal since launching in late May. SK Hynix-linked funds lost $601 million while Samsung-linked products lost $381 million, according to Bloomberg Intelligence data. The reversal follows a brutal July when the KOSPI sank 22%. Regulators responded by raising minimum deposits and imposing a five-day mock trading rule after emergency meetings, as retail investors rotated into equity-linked securities offering 3.5 trillion won in exposure.

Recovery fragile as market awaits Nvidia guidance

The KOSPI has rebounded about 20% from its lows, but volatility persists. On August 26, lower US Treasury yields and falling oil prices supported equity sentiment by easing pressure on technology stock valuations. Investors remained cautious ahead of Nvidia’s earnings report, which could influence the broader AI and semiconductor sector. The concentration of the KOSPI in two stocks leaves the index fully exposed to the semiconductor cycle’s volatility, with other core industries including automobiles, chemicals, and steel losing competitive ground.

Final Thoughts

The KOSPI’s recovery hinges on Nvidia’s earnings guidance and whether retail investors regain confidence in leveraged products. With Samsung and SK Hynix still dominating the index, any renewed weakness in chips could reignite the volatility that erased $2.5 trillion in six weeks.

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