The KOSDAQ market experienced severe liquidity contraction as trading volume dropped to 4.62 trillion won on the 21st, down from a 15 trillion won daily average between January and May 27, according to Korea Exchange data released on the 27th. The sharp decline coincided with approximately 12 trillion won in daily trading volume concentrating into 16 Samsung Electronics and SK Hynix single-stock leveraged and inverse products. South Korea's Financial Services Commission responded by raising the minimum deposit requirement to 30 million won, though the measure has shown limited effectiveness in reversing the capital concentration trend.
KOSDAQ Trading Volume Drops to One-Third of Pre-Launch Levels
Korea Exchange data shows KOSDAQ daily trading volume averaged 15 trillion won from the beginning of the year through May 27, when single-stock leveraged products launched. Volume collapsed to 4.62 trillion won on the 21st—approximately one-third of the pre-launch average. For the period through the 22nd this month, daily average trading volume remained at approximately 6 trillion won.
Samsung and SK Hynix Leveraged Products Attract 12 Trillion Won Daily
The 16 Samsung Electronics and SK Hynix single-stock leveraged and inverse products concentrated capital flows during the same period. These products recorded average daily trading volume of 11.82 trillion won from May 27 through July 22. In July, the daily average increased to 12.87 trillion won. Trading volume reached a single-day peak of 19.44 trillion won on the 24th of last month.
Single-stock leveraged products track twice the daily price movement of a specific stock, creating high-risk exposure. Gains double when the underlying stock rises, but losses also double during declines. Inverse products generate returns when the underlying asset falls. Short-term trading demand exploiting high volatility drove the surge in trading volume following the product launches.
According to the Financial Services Commission, single-stock leveraged and inverse products were introduced on May 27 to address regulatory asymmetry between domestic and overseas markets and expand investor choice. Market capitalization grew approximately 2.7 times from 4.4 trillion won at launch to 11.9 trillion won as of the 15th. Daily trading volume expanded from 10.4 trillion won on the first trading day to approximately 13 trillion won.
Financial Services Commission Raises Minimum Deposit to 30 Million Won
Financial authorities determined that investment risk increased as semiconductor sector volatility expanded sharply on a global scale. The Commission announced supplementary measures centered on investor protection, including raising the minimum deposit requirement to 30 million won.
From May 26 through July 10, annualized stock price volatility for major memory semiconductor companies reached: U.S.-based SanDisk 131%, Micron 123%, Japan's Kioxia 118%, SK Hynix 113%, and Samsung Electronics 96%. Investment risk surrounding Samsung Electronics and SK Hynix leveraged products expanded to levels comparable with global memory manufacturers.
Capital Concentration Persists Despite Regulatory Measures
Trading volume maintained approximately 12 trillion won daily following the announcement of countermeasures, showing limited mitigation of capital concentration. On the 20th—the first trading day after the announcement—the 16 products recorded 12.33 trillion won in trading volume. The figure showed minimal difference compared to trading volume on the announcement day of the 16th (12.17 trillion won), despite the minimum deposit increase and other measures announced after market close that day.
Securities Industry Identifies Black Hole Effect Replacing Trickle-Down Pattern
Securities industry sources diagnose a "black hole" phenomenon where liquidity concentrates exclusively in large-cap semiconductor stocks and single-stock leveraged products, replacing the historical "trickle-down effect" where KOSPI strength spread to KOSDAQ.
A securities industry official stated: "In the past, when KOSPI large-cap stocks rose, investor capital subsequently moved to KOSDAQ small and mid-cap stocks, but recently trading is concentrating only in Samsung Electronics, SK Hynix, and single-stock leveraged products. If KOSDAQ liquidity contraction becomes prolonged, price discovery function may weaken and market volatility could increase further."
FAQ
What caused KOSDAQ stocks trading volume to collapse in recent months?
KOSDAQ daily trading volume dropped from a 15 trillion won average (January through May 27) to 4.62 trillion won on the 21st, as approximately 12 trillion won in daily trading concentrated into Samsung Electronics and SK Hynix single-stock leveraged and inverse products launched on May 27.
What regulatory action did South Korea's Financial Services Commission take regarding leveraged products?
The Financial Services Commission raised the minimum deposit requirement to 30 million won in response to increased investment risk from expanding semiconductor sector volatility. The measure was announced on the 16th after market close, but trading volume remained at approximately 12 trillion won daily, showing limited effectiveness in reversing capital concentration.
