‘Leverage goes both ways…’
That is a lesson that many are learning in a painful manner as the army that enjoyed the momentum escalator ride up are now decrying the elevator plunge lower… and the poster-child for this pain is Korea.
Following anxiety over new Chinese competition, and disappointing earnings from SK Hynix overnight, Korea’s stock market has plunged 44% from its record highs in June (but remains up 27% YTD still)…
Triggering yet another circuit-breaker…
And prompting panic among Korean regulators:
As Bloomberg reports, South Korea will hold an emergency meeting Wednesday evening to discuss the market situation after a stocks rout that has wiped billions of dollars off investors’ holdings. The meeting, hosted by Finance Minister Koo Yun Cheol, will involve all of the country’s top financial authorities, starting from 6 p.m. local time, according to lawmaker Yoo Dong-soo.
Top administration officials faced multiple rounds of questioning by lawmakers at the country’s parliament Wednesday.
Lawmakers have linked the rout in part to South Korea’s rollout of leveraged single-stock products in May.