Key points
- Bloomberg Opinion published a column by Shuli Ren on August 3 titled "South Korea Is Becoming Uninvestable, Too," comparing the Kospi's fall to China's 2015 crash.
- The column counted 33 sessions in 2026 where the Kospi moved 5% or more. The Nikkei 225 had 4 and Hong Kong's Hang Seng had none.
- It said about 360,000 accounts were sold out by their brokers, and 62% of those belonged to investors 35 or younger.
- Korea's Financial Services Commission answered the same night, calling that figure unsourced and saying forced sales ran about 3,000 accounts a day in June.
- The two numbers don't measure the same thing. One is a rate and the other is a total.
On August 3 in New York, Bloomberg Opinion published a column under the title "South Korea Is Becoming Uninvestable, Too." It was written by Shuli Ren, the Bloomberg Opinion columnist who covers Asian markets.
It opens on a fair question. With the worldwide selling in AI shares calming down, Ren wrote, "it's natural to ask if the benchmark index is destined for a rebound." The rest of the column says that question is the wrong one.
"South Korea's selloff and the government's clumsy attempt to lift the Kospi have traumatized a new class of investors and stigmatized the market," it said.
Ren called the Kospi's near 40% fall in just 27 trading days "comparable to China's market crash in 2015." I checked that one. The index hit an intraday high of 9,385.59 on June 19 and traded down to 5,593.56 on July 30, so the fall is 40.4%. The number is right.
Korean papers picked the column up on Tuesday morning in Seoul, and by the afternoon it was on the wires and the evening news. What upset people wasn't the China crash comparison. It was what Ren said after it, that global asset managers have spent the last few years treating China as a country not worth investing in because of policy failures and disregard for investors, and that people are now saying the same kind of thing about Korea.
The argument is about how the market moves, not about what the companies earn. The column counted 33 sessions this year when the Kospi moved 5% or more in a day. Japan's Nikkei 225 had four. Hong Kong's Hang Seng had none. I wrote last month that the same market set off 41 sidecars in seven months, against 26 in all of 2008, so the count itself isn't news to anyone who follows Seoul. Putting it next to Tokyo and Hong Kong is what makes it land.
Ren put the blame in two places. The first is the single-stock leverage funds Korean regulators approved in late May, which let people buy twice the daily move of Samsung Electronics or SK Hynix (SKHY). The column said one SK Hynix leverage fund fell 84% from its June peak. It also cited a Goldman Sachs estimate that at the June top, a 5% move in SK Hynix could bring buying and selling from those funds worth about 40% of everything that normally trades in the stock in a day. Korea's new deposit rule doesn't fix that, Ren argued, because the side effects stay for as long as the product does.
The second is the National Pension Service. The column argued the fund raised its own domestic stock target instead of selling into a rally, and so gave up the job a pension fund is supposed to do when a market runs hot.
The regulator answered that night
Late on Tuesday in Seoul, the Financial Services Commission (금융위원회) put out a written response. That's unusual. Korean regulators normally let a foreign opinion column go by without saying anything.
The Commission went after one number. Ren had written that about 360,000 accounts were sold out by their brokers, and that 62% of those belonged to investors 35 or younger. The Commission said the column was working from figures with an unclear basis, and that "in the case of forced sales on credit loans and unpaid margin, June ran at a level of about 3,000 accounts a day."
It gave numbers of its own too. Korea's economy grew 3.7% in the second quarter from a year earlier, and the May current account surplus of $38.61 billion was the biggest on record.
Put the two account numbers side by side, though, and they are not answers to each other. About 3,000 a day is a speed. About 360,000 is a total, and neither Bloomberg nor the Commission said how long a stretch that 360,000 covers. At 3,000 a day you reach 360,000 in about 120 trading days, a little under six months. So the regulator's own number doesn't actually rule out the column's.
Picking June is a problem on its own. The Kospi peaked on June 19 and the worst of the fall came in July, when the market halted on two days in a row for the first time ever. June is mostly the month before the damage. Data I wrote about last week came from the ten biggest Korean brokerages. It showed forced selling already up 596% between January and June, rising fastest among investors 70 and older. June wasn't a quiet month either. It just wasn't July.
What the two sides are actually arguing about
Nobody in this argument is saying Korean companies are doing badly. The column says the opposite, that Samsung and SK Hynix, which it notes "make up more than half of the index, are direct beneficiaries to the AI infrastructure boom." And the Commission's reply is a list of good economic numbers.
So the claim is smaller than it sounds at first, and harder to answer. It's that you can believe every word of the AI story and still decide the Korean market isn't a sensible place to own that story, because the up and down is more than you can sit through.
That's about how the market moves, not about what Korean companies earn. And the government's own deposit rule on the leverage funds is already an admission that the way it moves became a problem. What's left to argue about is whether that fix came in time, and whether it goes far enough.
Meanwhile the Kospi rose on the day the column reached Seoul. It closed Tuesday at 6,358.95, up 1.62%, and the Kosdaq rose 5.88% as money went into bio and battery shares instead of the two chipmakers.
Sources
- Bloomberg Opinion, Shuli Ren, South Korea Is Becoming Uninvestable, Too, August 3, the column itself and the passages quoted here in English
- 아주경제, 금융위, '韓 투자부적합' 블룸버그 칼럼 정면 반박…"출처 불명 통계 인용", on the Financial Services Commission response, the 3,000 accounts a day figure, the GDP growth and the current account surplus
- 더퍼블릭, 블룸버그가 꼬집은 韓 증시의 민낯…코리아 디스카운트 해소하려다 '코리아 롤러코스터', on the 84% fund decline, the Goldman Sachs estimate and the 360,000 accounts with the age breakdown
- 디지털타임스, 블룸버그 "한국 투자 부적격 국가 되나"...코스피 변동성 맹비난, on the column's argument about the National Pension Service and the leverage products
- 머니투데이, 비반도체 순환매 탔다…숨 고른 삼전닉스, 관건은 AMD 실적, on the August 4 Kospi and Kosdaq closes
- Our earlier coverage: the 41 sidecars this year and the forced selling data
The column is quoted in its original English. The Financial Services Commission statement is translated from Korean. This article is for information only and is not investment advice.
