Rising KOSPI Volatility, Pointing to the Impact of Single-Stock Leveraged Products

Amid recent sharp rises and falls in the KOSPI and expanded volatility, criticism has emerged that a singlestock leveraged product that invests 2x in Samsung Electronics and SK hynix is amplifying market swings. According to the Korea Exchange and the securities industry, on the 9th the KOSPI rose more than 4% intraday before at one point falling more than 2%, showing significant volatility, and then closed up 0.62% at 7,291.91. The article analyzed that the product introduced by the government on May 27 is excessively increasing stock price fluctuations. NH Investment & Securities analysis showed that so far this year, there have been 42 days when the KOSPI rose or fell by more than 3% in a single day, a sharp increase from 9 days last year. In particular, during the 30 trading days after the launch of the singlestock leveraged product, there were 16 days of more than 3% swings, leading to the assessment that trading in derivativelike products linked to specific stocks has increased market instability. In addition, as the trading value of the twostock leveraged product was tallied at a very large level compared with the trading value of Samsung Electronics and SK hynix, criticism was also raised that the socalled “whackadog” phenomenon is appearing, in which trading in related products exerts greater influence than the market’s core stocks.