![Dealers work at the trading room of Hana Bank's headquarters in Seoul on Friday, as the Kospi closed down 37.61 points, or 0.60 percent, at 6,258.77. [Yonhap]](https://wimg.heraldcorp.com/news/cms/2026/08/09/rcv.YNA.20260807.PYH2026080708840001300_P1.jpg)
South Korea's stock market may have passed peak volatility as leveraged positions are unwound and regulators tighten oversight, analysts say.
Bloomberg reported Sunday that the KOSPI 200 Volatility Index, known as VKOSPI, surged to an intraday high of 97.99 on June 29, its highest level since the 2008 global financial crisis. After hovering above the 90 mark through the end of last month, the index has since fallen to the mid-70s this month.
Bloomberg attributed the easing of volatility to a decline in margin financing balances following forced liquidations and tighter regulations on leveraged ETFs. Trading volumes and assets tied to leveraged products linked to major semiconductor stocks — including Samsung Electronics and SK Hynix — have shrunk, helping to cool some of the overheating that had amplified market swings.
The sharp drop in share prices has also significantly reduced valuation pressure. Bloomberg noted that the Kospi's 12-month forward price-to-earnings ratio has approached a record low of 5.1 times, suggesting that by some measures Korean equities may have entered undervalued territory following the recent selloff.
Whether global investors will quickly return to the South Korean market, however, remains uncertain. While volatility has eased, it remains elevated compared with historical averages, leaving investors to weigh discounted valuations and solid earnings outlooks against the risk of further sharp swings.
"It's clear that Samsung Electronics and SK Hynix are cheap right now and have solid earnings outlooks," said Yiping Liao, a fund manager at Templeton Global Investments. "But the extreme volatility we've seen so far is making investors cautious in the short term."
brunch@heraldcorp.com
