MW Korea stock-market action was 'textbook bubble,' say Bank of America strategists

By Steve Goldstein

Action on the stock market in Seoul could have been taken directly from a textbook on market bubbles, observe B. of A. strategists.

The whipsaw moves in South Korean stocks last week were textbook examples of a bubble, Bank of America's equity strategists say.

The analysts pointed to the 12% drop in the Kospi index KR:180721 that was followed by a 10% rebound, which they say resembled the extreme instability seen during the Asian financial crisis, the dot-com bubble and the 2008 global financial crisis.

The U.S.-listed iShares MSCI South Korea ETF EWY has gained 38% this year but has dropped 13% from its highs of February.

Bank of America has a measure it calls the "bubble risk indicator," which distills an asset's returns, volatility, momentum and fragility into a single reading from 0 to 1, with 1 representing extreme bubble-style price action.

The Kospi's bubble-risk-indicator reading is at extreme levels, the strategists say, and there are also frothy dynamics in the options market.

"Anecdotes around the role of Korean retail participation in the historic rally - with leverage (including via levered & inverse ETFs) - only reinforce the textbook bubble-like environment observed in the Kospi last week," the B. of A. strategists say.

Their analysis of bubble conditions, taken before Monday's wild swings in oil, put the Kospi as having the most extreme bubble dynamics among major assets, ahead of "extremely bubbly" gold (GC00), Brent crude oil (BRN00), the Bloomberg commodity index and silver (SI00).

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-Steve Goldstein

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March 10, 2026 09:21 ET (13:21 GMT)

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