"On Par with China's Crisis 11 Years Ago"... Why South Korea Faces Chilling Warning

Amid extreme volatility in the domestic stock market, a foreign media outlet has evaluated that "South Korea is becoming an uninvestable country."

Bloomberg columnist Shuli Ren evaluated in a column titled "South Korea Is Becoming Uninvestable, Too" that South Korea has the world's hottest yet most volatile stock market this year.

Pointing out that the KOSPI plunged nearly 40 percent in just 27 trading sessions from its peak last June, she noted that this level of volatility is on par with the 2015 Chinese stock market crash.

Shuli Ren pointed out that the recent sell-off and the government's clumsy attempts to boost the KOSPI have traumatized a new generation of investors and stigmatized the market, singling out market "volatility" as the biggest problem.

She noted that this year, there have been as many as 33 days where the index fluctuated by 5 percent or more in a single day for the KOSPI, compared to 4 days for Japan's Nikkei 225 index and zero times for Hong Kong's Hang Seng index.

Shuli Ren specifically pointed to single-stock leveraged exchange-traded funds (ETFs), whose introduction was approved by the government in late May, as the main culprit behind the heightened volatility.

Although the South Korean government has recently tightened regulations, such as raising the basic deposit requirement for leveraged products, she predicted that "side effects will persist unless the products themselves are suspended."

She also mentioned the National Pension Service's inconsistent actions, pointing out that "by arbitrarily raising its domestic stock investment target to avoid selling its KOSPI holdings, the National Pension Service has abandoned its inherent role as a pension fund in cooling down an overheated market."

Finally, Shuli Ren warned, "In recent years, global asset managers have evaluated China as uninvestable due to government policy failures and disregard for investors, and unfortunately, similar concerns are now emerging regarding South Korea." She added, "The South Korean government needs to reflect on whether it knows what it is doing and whether young, first-time investors are being properly protected."

(Produced by Kim Taewon | Video Editing by Lee Yu-jin | Design by Yook Do-hyun | Production: SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.