Violent Volatility Market...Does My Leverage Become a Boomerang?

Summary

CEO Song Jae-gyeong warns that the Korean stock market has been driven by a surge in leveraged investments and exhibits abnormal volatility with the VKOSPI reaching extreme levels even as the KOSPI rises. He advises that the situation is fragile, with a risk of a violent unwind, and recommends investors reduce exposure to the crowded Samsung/SK Hynix duo while rotating into undervalued low PBR stocks, dividend stocks, and equal-weight indices.

• Korean and Taiwan leveraged ETF investments jumped sixfold to nearly 1,000 trillion won in five months, fueling the rally but creating high downside risk.
• The Korea VKOSPI volatility index has climbed above 2008 crisis levels alongside a rising KOSPI, indicating unresolved leverage and growing fragility.
• The speaker urges caution, saying the current setup could turn into a boomerang, making the market harder in the second half.
• He expects Samsung Electronics and SK Hynix, the most crowded names, to see momentum slow as money rotates out.
• Rotation beneficiaries include Korean low PBR value stocks, dividend stocks, and equal-weight indices.
• Investors are advised to keep a cash buffer (at least 10-20%) for cushion and to diversify rather than concentrate.
• Regular rebalancing (selling outperformers, buying laggards) is highlighted as a tool for navigating heightened volatility.