South Korea's central bank has released an in-depth review of the sharp fluctuations in the country's benchmark KOSPI index this year, pointing to an outsized influence from a handful of semiconductor heavyweights and a surge in leveraged trading.

The findings, detailed in the Bank of Korea's September 2026 Monetary Policy Report, reveal a stark concentration of market performance. Samsung Electronics and SK Hynix accounted for a staggering 99% of the KOSPI's contribution to gains as it surged from the 8,000-point mark to the 9,000-point level in June.

While the two chip titans contributed 50.8% of the index's rise when it first broke through the 5,000-point threshold, their combined influence grew to 73.2% between the 6,000 and 7,000-point ranges, and further to 94.6% between 7,000 and 8,000. During the final push from 8,000 to 9,000, all other listed companies contributed a mere 1% to the index's upward movement.

The central bank highlighted semiconductors, margin trading, and ETFs as the key themes of the period, according to the report.

The high concentration in semiconductor stocks was identified as a primary amplifier of volatility during market corrections. During the KOSPI's retreat from 9,100 to 5,500 points, Samsung Electronics and SK Hynix were responsible for 69.3% of the index's decline. The Bank of Korea noted that expectations of a global boom in artificial intelligence and the semiconductor sector drove gains into a few leading chipmakers, increasing the market's sensitivity to shifts in the memory chip industry's outlook.

Changes in liquidity and funding demand were also cited as drivers of amplified swings. Retail investors' use of leveraged "margin loans" reached record highs before forced liquidations during the downturn left many with significant losses. In response, financial regulators introduced a package of measures to raise the bar for such borrowing, aiming to cool retail fund flows into the stock market.

The central bank also pointed to the hasty launch of leveraged ETFs tied to Samsung Electronics and SK Hynix in late May, driven by expectations of further gains, as a factor that exacerbated market instability. In late August, Kim Yong-beom, the head of the policy office at the presidential office, resigned amid controversy over the ETF leverage rules.

Beyond domestic single-stock leveraged ETFs, the report also flagged foreign leverage on Korean equities as a new risk point. It explicitly named the U.S.-based AI-focused hedge fund, Situational Awareness, which reportedly utilized leverage of up to four times when building and unwinding positions in global memory chip companies. The fund was cited as a factor that intensified the market sell-off in July.

The Bank of Korea warned that as financial products linked to Korean semiconductor firms expand rapidly in overseas markets, the possibility of spillover effects into domestic financial markets through unexpected channels is rising. It emphasized the need to strengthen and refine related monitoring systems.

Kim Yun-jun, a South Korean scholar, commented that the financial authorities' policies have suppressed the "tools" but not the speculative sentiment itself. The regulation has blocked access to "high-risk products," but has not fully deleveraged retail investors.

"The enthusiasm of Korean retail investors has not been completely extinguished," he said. "After being shut out of single-stock leveraged ETFs, they are now turning to other channels such as contracts for difference (CFDs), standard margin trading, and bank credit loans. The entry thresholds for these avenues have not been tightened in tandem, so the risk of a sell-off persists if the index experiences another sharp decline."

SK Hynix faces a new test this week as it prepares for a crucial vote on its latest labor agreement. In late August, some union members voted down the preliminary wage deal, with 50.08% of the 15,045 participating employees opposing it—a difference of just 25 votes.

The initial proposal focused on a 6.3% base salary increase and adjustments to the profit-sharing scheme. Controversy arose because, compared to the company's profit-sharing bonus system that made headlines in 2025, the new plan increased the proportion of stock compensation while reducing the cash payout ratio.

Following the rejection, management and labor negotiations led to a revised framework, with the key adjustment being the basic payout ratio for the excess profit distribution. This has been changed from a 40% cash and 60% stock split to an equal 50-50 split. Additionally, some deferred payments will be made earlier, and the company has agreed to cover additional costs arising from share price rises during the stock distribution process. Partial supplements have also been made to the employee housing loan system.

The latest round of voting is scheduled for September 15-16. Kim Yun-jun noted that since other internal unions have already approved the tentative agreement, the re-vote by the production workers' union will effectively determine whether the wage and collective bargaining agreement can be finalized. "If the revised proposal is rejected again, management and labor will have to return to the negotiating table, and there is a possibility that renegotiations could become protracted," he said.