KORU ETF Rips Higher Even As KOSPI Slides: Economist Says South Korea’s Benchmark Is More Volatile Than Bitcoin

• Economist Steve Hanke noted in a post on X that South Korea’s benchmark stock index has become the most volatile in the world, surpassing even Bitcoin’s volatility, as per a chart he shared. 
• The volatility in South Korea's stock market rally has partly been fueled by the government's push to channel household savings into domestic equities and reduce capital outflows from overseas investments and property, Bloomberg reported. 
• Lale Akoner, global market analyst at eToro Group Ltd., told Bloomberg that while this is a textbook example of what happens when a crowded trade meets leverage, it should not be mistaken for a wholesale collapse in the AI investment case.

The Direxion Daily South Korea Bull 3X Shares (KORU), a leveraged exchange-traded fund that tracks 3x the daily performance of the MSCI Korea Index, is up nearly 8% in the overnight session late Sunday even as the country’s benchmark index KOSPI was down about 5% at the open in Asian markets on Monday. 

Meanwhile, economist Steve Hanke noted in a post on X that “South Korea’s benchmark stock index has become the world's most volatile,” surpassing even Bitcoin’s volatility as per a chart he shared. 

Why Is KOSPI Selling Off?

The KOSPI has fluctuated sharply in 2026 amid investor concerns over AI’s sustainability, even as capital expenditures among top hyperscalers have been growing rapidly. 

The South Korean benchmark index has been dragged lower by a sharp decline in the shares of Samsung Electronics and SK Hynix (SKHY) in recent days, which together comprise more than half of the index. 

Korea-listed Samsung shares are down about 22% in the past month, while SK Hynix is down more than 34%. U.S.-listed SKHY stock has lost about 14.5% of its value since its debut in early July. 

The volatility in South Korea's stock market rally has partly been fueled by the government's push to channel household savings into domestic equities and reduce capital outflows from overseas investments and property, Bloomberg reported. 

Government’s Push Into Leveraged ETFs Added Fuel To Rally

As part of that effort, regulators fast-tracked the launch of more than a dozen leveraged exchange-traded funds tied to AI chipmakers including Samsung Electronics and SK Hynix, giving retail investors access to products that amplify daily returns using derivatives and debt. The move helped drive a surge in trading activity but also increased market volatility, with the Kospi recording some of its largest swings on record. 

After the benchmark index plunged sharply from its peak, President Lee Jae Myung's administration held emergency meetings, while financial regulators introduced measures to curb retail investments in leveraged ETFs.

“What is particularly ironic is that the government claims it is trying to contain the situation, yet it was the government itself that created this gambling table,” Jung Eui-jung, head of the Korean Stockholders’ Alliance, which has 64,000 members, told Bloomberg. 

Meanwhile, Kim Dong Woo, a 33-year-old retail investor blames the government for failing to act fast enough, as per Bloomberg. Dong Woo said, “The damage has been done.” 

What Are Analysts Saying About KOSPI?

“The AI protagonist in South Korea have clearly flown TOO CLOSE TO THE SUN and had their feathers singed. IT'S CLEAR THAT INVESTORS AROUND THE WORLD ARE GROWING WEARY OF THE OBVIOUS AI HYPE AND NONSENSE,” Hanke said on X. 

However, Lale Akoner, global market analyst at eToro Group Ltd. in London has a different take. “It’s a textbook example of what happens when a crowded trade meets leverage,” she said, according to a separate Bloomberg report.

“Deleveraging is unlikely to be resolved in a matter of days, so investors should expect further sharp swings in technology and semiconductor stocks over the coming months,” she added, while also cautioning that “this should not be mistaken for a wholesale collapse in the AI investment case.”

Institutional TMT research analyst Nicholas Mugalli said in a post on X last week that he was bullish about Korea despite the recent performance. “Retail has stopped leveraging into every dip and started using strength to exit repaying margin, redeeming leveraged products, taking the stop loss. Selling the rip instead of buying the dip is what the end of a leverage unwind actually looks like,” he said. 

“I said the correction ends when the leverage is gone not when the chart looks cheap. Today the leverage is out and the institutions are in. The rebuild is underway and it’s happening on institutional shoulders this time and it’s the best thing we can ask for. Limit up. I’m selling another kidney to buy more of Korea!” he added.

What’s Retail Saying About KORU?

On Stocktwits, retail sentiment around the KORU ETF was ‘bearish’ even as messages around the ticker jumped more than 300% over 24 hours, according to platform data. 

KORU plunged more than 61% in July after losing about 28% of its value in June.

Despite the decline, KORU has gained 43.72% so far in 2026.

One user said, “dont listen to all the bears talking you Kospi is down. They were already down following the US selloff Friday. Remember the KOSPI does not trade Friday night because they are a day ahead of us. $KORU is up a decent amount which shows bullish to start the week vs how they ended last week.”

Another user said, “$KORU according to Koru stock pattern history, huge one is coming in 2-3 months.  We should hold it for 2-3 months.”

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