South Korea's KOSPI Triggers 6 Circuit Breaker Halts This Year, Linked to Leverage ETF Debut

According to Korea Exchange, as of July 12, South Korea's KOSPI market experienced six circuit breaker halts this year, accounting for half of all such occurrences since the mechanism's introduction in 2000. The market also recorded 34 trading halts (sidecars) through July, 13.6 times the historical annual average of 2.5, surpassing 2008 financial crisis levels within just six months.

The spike in volatility correlates with the May 27 debut of single-stock leverage exchange-traded funds (ETFs), which attracted 212 trillion won in capital in June alone. The low 20,000 won entry price spurred retail investor inflows, but the products' rebalancing mechanism amplified market swings. On June 23, fund managers mechanically sold 9.2 trillion won in holdings to maintain target leverage ratios, triggering a sell-off loop. Analysts noted that without institutional support—deterred by extreme volatility—the market faces sustained instability.