Post

Let's talk about another thing. Today, many people said that the volatility of the South Korean stock market has surpassed that of cryptocurrencies. I checked, and indeed it is so. VKOSPI, also known as the Korean panic index, reached a high of 97.99 in the first half of this year, setting a historical record since statistics began in 2009, and it is still running above 80. For comparison, the crypto market's own volatility indicator, Deribit's DVOL, surged from 35 to 65 last Friday, which is a rare sharp jump in recent years, and has now fallen back to around 43. Comparing the two makes it clear that cryptocurrencies, long considered the ceiling of risk assets, now have lower volatility than the South Korean stock market. This mismatch itself is very telling. The structural reasons behind this are not complicated. Samsung Electronics and SK Hynix now account for more than 53% of the total market capitalization of KOSPI, meaning the index's rise and fall are basically hijacked by these two stocks. Any slight movement related to AI storage is amplified by this extreme concentration into a huge shock to the entire index. Additionally, at the end of May, the Korea Exchange launched leveraged ETFs on single stocks, allowing retail investors to directly leverage bets on these two stocks, further pushing volatility upward. The number of volatility interruptions triggered in the first half of this year set a historical half-year record. My own view is that this volatility structure does not reflect normal market risk but is a fragility created by the overlay of leverage and concentration. Regulators are now discussing reducing the leverage multiple of leveraged ETFs from 2x to 1x, which is the right direction, but this can only alleviate incremental leverage. Without solving the existing high concentration problem, the exaggerated volatility of the South Korean stock market compared to cryptocurrencies will likely recur repeatedly, especially in the coming quarters as long as there is any fluctuation in capital expenditure expectations for AI storage. The same kind of stampede will happen again. $SKHYNIX $SAMSUNG