South Korea’s KOSPI plunged 9.99% on Tuesday, the largest one-day drop in three
months, after foreign investors sold following a regulator signal that the chip
sector was overheating. CLSA chief equity strategist Alexander Redman said the
move exposed heightened volatility driven by heavy retail participation and
margin use, warning volatility "has gone out of control" and noting
regulator-approved leveraged single-stock ETFs have amplified risks. South
Korea’s market regulator acknowledged it was too hasty approving leveraged funds
tied to major chip names launched last month and warned retail investors against
using leverage as margin debt and financing to buy stocks hit a record high in
June.
