"My Money Is Melting Away... Government Blamed for Turning Stock Market Into a Playground for Foreign Investors Amid Market Crash"

Unprecedented 'Stock Market Panic' Triggers Wave of Criticism
Leverage Distorts the Market... Calls for Government Accountability Emerge

The domestic stock market has experienced an unprecedented crash, with circuit breakers triggered simultaneously on both the KOSPI and KOSDAQ markets for two consecutive days for the first time ever. As a result, dissatisfaction among individual investors has reached its peak. In particular, there is growing criticism and calls for accountability, with many pointing out that the government's policy decision in May to allow double-leverage products for single stocks has significantly amplified market volatility.

Actor Han Jungsoo. Instagram capture

KOSPI Falls Below 5,600...First-Ever Back-to-Back Circuit Breakers

According to the Korea Exchange on July 29, the KOSPI index closed at 5,663.24, plunging by 360.42 points (5.98%) from the previous trading day. The KOSPI opened up by 1% but began to free-fall after 10:55 a.m. when KOSPI 200 futures prices plummeted, triggering a sell-sidecar. At one point during the session, the index dropped to as low as the 5,262 level before a first-stage circuit breaker was activated at 12:32 p.m., resulting in a complete trading halt for 20 minutes. Although some of the losses were recouped at the end of the session due to bargain hunting, the KOSPI has posted a historic drop of over 15% just this week.

The KOSDAQ index also ended the day down, closing at 662.68, a decline of 43.17 points (6.12%), after falling 7.72% the previous day. The KOSDAQ market likewise saw a first-stage circuit breaker triggered at 12:19 p.m., temporarily suspending trading. This marks the first time in the history of Korea’s capital markets that circuit breakers have been triggered in both the KOSPI and KOSDAQ markets for two consecutive trading days. Circuit breakers are a market stabilization mechanism that is triggered when an index drops more than 8% from the previous day's close and remains there for over a minute.

Image generated by artificial intelligence (AI) to aid in understanding the article. ChatGPT

Retail Investors Outraged...Government Accountability Questioned

With the stock market collapsing to catastrophic levels, investor outrage and complaints of severe losses have flooded various social networking services (SNS). Bank employee Mr. A said, “I started with 200 million won and grew my assets to 550 million won. Then, after judging that semiconductor stocks were undervalued, I used margin loans and double-leverage products to concentrate 700 million won into Samsung Electronics and SK hynix. But within a month, my portfolio value plunged to 220 million won.” He lamented, “More than 500 million won vanished in an instant. I feel devastated.”

Mr. B, who also suffered losses after using overdraft accounts and credit loans to invest in SK hynix and semiconductor exchange-traded funds (ETFs), commented, “Even what’s left is money from overdraft accounts. I don’t know if I should just liquidate everything.”

Direct criticism of the government’s inadequate response and policy failures has also poured in. Actor Han Jungsoo posted on his SNS account on the 29th, “This is basically a situation worse than war or a natural disaster, and yet the government is just standing by and watching—are they insane?” He went on to say, “In May, the government abruptly introduced double leverage, turning the stock market into a playground for foreign investors, and now they’re turning a blind eye.” On the post, comments such as “My money is evaporating,” “The government must come up with countermeasures,” and “Only retail investors are suffering” continued to pile up in agreement.

Authorities Apologize Amid Criticism of ‘Belated Response’

The backlash against the government stems from the financial authorities’ decision in May to allow domestic double-leverage ETFs and ETNs based on single large-cap stocks, such as Samsung Electronics and SK hynix. As ultra-high-risk products that track twice the daily return of their underlying assets poured into the market, losses and selling pressure surged dramatically whenever stock prices fell, distorting overall market volatility. This is the dominant analysis among experts.

Financial authorities later attempted to contain the fallout by halting the listing of new single-stock leverage products and raising investor deposit requirements. However, these measures have been criticized as “closing the barn door after the horse has bolted,” as they only came after the market had already collapsed.

At the National Assembly’s National Policy Committee meeting held on this day, Lee Eogwon, Financial Services Commission Vice Chairman, bowed his head and said, “We take the sharp increase in market volatility very seriously.” He added, “We will put all our effort into implementing supplementary measures to stabilize the market and, if necessary, swiftly take additional stabilization actions.”

This content was produced with the assistance of AI translation services.