Key points
- The Kospi closed at 5,663.24 on July 29, 2026, down 360.42 points or 5.98%. It hit 5,262.77 in the afternoon, down 12.63%.
- Korea Exchange halted the Kospi at 12:32:32 p.m. The Kosdaq halted the same day. Both halted on July 28 as well.
- Kospi market value fell 864.5 trillion won ($595B USD) over the 2 days. Kosdaq market value fell 56.5 trillion won ($38.9B USD).
- Koo Yun-chul apologized for the launch of single stock leveraged ETFs at 3:23 p.m. He met the central bank governor and 3 other officials at 6 p.m.
- A 30 million won ($20,650 USD) cash deposit applies from July 31. Lee Eok-won put a multiple below 2x and professional investor access under review.
Timing note: Seoul runs 13 hours ahead of New York. The July 29 Seoul session ended at 2:30 a.m. ET on July 29. The government meeting that followed started at 5 a.m. ET the same day, before the US open. Clock times below are Seoul time.
On July 29, 2026, South Korea's Kospi index closed at 5,663.24, down 360.42 points or 5.98%. Korea Exchange stopped trading in every Kospi stock for 20 minutes at 12:32:32 p.m. The Kosdaq closed at 662.68, down 43.17 points or 6.12%, and it was halted as well. Both markets were also halted on July 28. Korean markets had never had halts on two days in a row before this week.
The Kospi was higher in the morning. It reached 6,228.52 around midday, up 3.40%. It fell for the rest of the session. A halt is triggered when the index stays more than 8% below the previous close for one minute. The Kospi reached 5,262.77 after trading restarted, 12.63% below the July 28 close. It recovered about half of that in the last two hours.
SK Hynix (SKHY) closed down 9.61% at 1,401,000 won ($964 USD). Samsung Electronics closed down 5.23%. Individuals and foreign investors sold a combined 3.7 trillion won ($2.55B USD) of Kospi stock. Institutions bought about 3.6 trillion won ($2.48B USD).
921 trillion won over two days
Kospi market capitalization was 5,533.6 trillion won ($3.81T USD) at the July 27 close. It was 4,669.1 trillion won ($3.21T USD) at the July 29 close. The drop is 864.5 trillion won ($595B USD). Kosdaq capitalization fell from 425.2 trillion won ($292.6B USD) to 368.7 trillion won ($253.8B USD). The two markets lost 921 trillion won ($634B USD).
The Kospi is down 16.2% from the July 27 close of 6,755.75 and down 33.2% from the June 30 close of 8,476.48. The July 28 session alone was down 10.84%. SK Hynix fell 14.65% and Samsung Electronics 13.39% that day.
The 2x funds regulators keep coming back to
The funds pay 2x the daily move of one stock. The biggest ones in Korea track Samsung Electronics and SK Hynix, more than 50% of Kospi weight between them. Samsung fell 5.23% on July 29 and SK Hynix 9.61%. Each fund resets to 2x at the 3:30 p.m. close. A fund holding a stock down 9.61% sells shares into that same move to get back to 2x.
SK Hynix reported second quarter results on the morning of July 29. Operating profit was 60.5426 trillion won ($41.6B USD), up 557% from a year earlier and 5.5% under analyst estimates. CXMT closed its first Shanghai session up 465.82% on July 27.
The new rules take effect July 31
The Financial Services Commission announced the package on July 16, 12 days before the first halt.
| Measure | Change | Effective |
|---|---|---|
| New listings of single stock leveraged, inverse and covered call products | Suspended | July 16 |
| Advertising for listed products | Banned | July 16 |
| Required education before a first purchase | 2 hours plus a 1 hour advanced course, retest below 60 | July |
| Basic deposit | 10 million won ($6,880 USD) to 30 million won ($20,650 USD), cash only | July 31 |
| Price to net asset value gap allowed to liquidity providers | 3% to 2% | August |
| Minimum trade size | 1 unit to 20 units | November |
The FSC first set the deposit rule for early August, then moved it to July 31. The rule lands 2 days after the halts.
An apology in the National Assembly
Koo Yun-chul, the deputy prime minister and finance minister, took questions at the Finance and Economy Committee at 3:23 p.m. on July 29, 7 minutes before the close. He apologized for the launch of the products.
"I am sorry that we did not look carefully enough at what would follow from launching the product," he said, in remarks reported by Asia Economy. "It is hard to say leveraged ETFs are 100% responsible for the volatility in the market right now. Several things appear to be working together." His first response, he told the committee, had been the 30 million won ($20,650 USD) deposit and the cash requirement.
Lee Eok-won, who chairs the Financial Services Commission, spoke in the same building. "The question on adjusting the multiple is whether to bring it down, because 2x is too large right now, and on easing volatility I think it would have an effect," he said, according to Money Today. A cut would require fund shareholder meetings. "If necessary, there is also a way to take it as far as professional investors." He named 2 more measures, a cap on each investor's portfolio weight in these funds and intraday rebalancing rules for liquidity providers.
The meeting began at 6 p.m. at the Seoul Government Complex, 2 hours 30 minutes after the close. Koo, Bank of Korea Governor Shin Hyun-song, Lee Eok-won, Financial Supervisory Service Governor Lee Chan-jin and presidential economic secretary Ha Jun-kyung attended. No new measures were announced afterward.
What SKHY holders are looking at
SK Hynix closed at 1,401,000 won ($964 USD) on July 29. The Seoul close works out to $96.40 per SKHY receipt at 1,453 won to the dollar. Each receipt covers a tenth of a Seoul share. SKHY has traded above $96.40 all month.
Frequently asked questions
Why did Korea halt trading twice in two days?
Korea Exchange stops all trading for 20 minutes when the index stays more than 8% below the previous close for one minute. The Kospi triggered that at 10:13:43 a.m. on July 28, 2026 and at 12:32:32 p.m. on July 29. The Kosdaq triggered its own on both days. Korean markets had not had halts on two days in a row before this week.
What is a single stock leveraged ETF and why is Korea restricting them?
These funds pay 2x the daily move of one company's shares. Each resets to 2x at the 3:30 p.m. close, and the hedge behind it trades the same direction the shares moved. The biggest ones in Korea track Samsung Electronics and SK Hynix, more than 50% of Kospi weight between them. Samsung fell 5.23% and SK Hynix 9.61% on July 29. The Kospi fell 5.98% and halted at 12:32:32 p.m.
What restrictions are already in place?
New single stock leveraged product listings and advertising stopped on July 16, 2026. A 30 million won ($20,650 USD) cash deposit applies from July 31, up from 10 million won ($6,880 USD), and shares already owned no longer count toward it. The price to net asset value gap allowed to liquidity providers narrows to 2% in August. The minimum trade size goes to 20 units in November.
What further measures is Korea considering?
Lee Eok-won said on July 29, 2026 that a multiple below 2x is under review. He named 3 more, professional investor only access, a cap on each investor's portfolio weight in these funds, and intraday rebalancing for liquidity providers. The 30 million won ($20,650 USD) cash deposit still starts July 31. Nothing beyond it has been decided.
Sources
- Newspim (Korean language): July 29 closing report, index levels, circuit breaker times and investor flows
- Financial News (Korean language): 921 trillion won of market value lost across the two markets
- Asia Economy (Korean language): Koo Yun-chul at the National Assembly Finance and Economy Committee
- Money Today (Korean language): Lee Eok-won on the leverage multiple and professional investor access
- Financial Services Commission (Korean language): July 16 supplementary measures for single stock leveraged products
Won figures are converted at 1,453 won to the dollar, the July 29, 2026 rate. Quotes originally given in Korean are translated. This is not investment advice.
