South Korea's KOSPI Plunges 6.37% on July 16, Erasing Prior Day's Gains Amid Leveraged ETF Volatility

According to Seoul Economics, South Korea's KOSPI index plunged 6.37% on July 16, closing at 6,820.60 points and erasing the previous day's 6.24% gain of 7,284.41 points. Samsung Electronics fell 8.77% and SK Hynix declined 11.53%, leading the selloff on renewed concerns over memory chip price peaks and weakening demand. Single-stock leveraged ETF trading accounted for 96.3% of total KOSPI volume, marking the highest volatility on record.

The Bank of Korea raised its policy rate by 25 basis points to 2.75% on July 16, marking the first rate hike in 3.5 years as it shifts to tightening. The decision was unanimous, citing persistent inflation pressures and financial risks. Consumer price inflation remained above 3% in May and June, while import and producer price inflation climbed 20.6% and 8.5% year-on-year, respectively.