r/stockmarket
Korean markets triggered 2 circuit breakers this week, 1 after incredible MU earnings. Is this cause for concern?
Author worries extreme Korean market volatility and leverage crackdowns could contagion to US markets despite strong MU earnings.
- Micron delivered a massive earnings beat, indicating strong fundamentals in the memory sector.
- US stocks have not shown panic yet, suggesting the Asian sell-off might remain contained for now.
- Extreme volatility and circuit breakers in Korea point to underlying issues like high leverage and potential regulatory crackdowns.
- Proposed taxes on unrealized gains and shifts in HBM production could negatively impact South Korean tech giants.
- Broad Asian market declines raise concerns about a macro phenomenon that could eventually contagion to US markets.
Korean market volatility seems to have hit extreme levels this week. Markets first triggered circuit breakers on Monday night and then again Thursday night. The 2nd trigger was a bit surprising considering micron just delivered a massive earnings beat.
Experiencing 2 breakers in a week is already unusual. Triggering the 2nd one after a Micron earnings report that indicated Samsung and SK Hynix are thriving starts to concern me. It suggests the sell offs are not earnings related and that something else is going on behind the scenes.
I’ve seen a few slightly troubling reports come out of Korea this week. Law makers proposed taxes on unrealized gains and SK Hynix indicated a minor shift away from HBM production. But what concerns me the most is extreme Korean leverage and reports that lawmakers want to crackdown on the use of leverage. I’m wondering if both lawmakers and extreme market volatility will intensify fears among leveraged retail traders and lead to uncontrolled selling.
Additionally, the rest of Asian was also under water last night. Markets fell 2-4% across the board. Maybe there’s a greater macro phenomenon causing intense volatility in Asia that I’m not considering.
US stocks don’t seem to indicate any sense of panic so far. But I’m wondering if continued intense selling in Asia could have a contagion effect on American markets, especially because Korea’s top stocks are so closely tied to the AI narrative.
Did you look into why? Korea introduced 2x ETFs late May and everyone got margin called
that margin guy sure love to make calls
Wait, his name is Margin? I thought it was Martin. Makes much more sense now!
Yes. Sell. Everything.
I sold everything. House, cars, wife and kids. What now?
Buy it all back at a higher price!
It just means the electricity went off for a bit i wouldn't worry
When their main index is 60% in two companies what could go wrong
I'm afraid US market is headed in this direction with SnP500 concentration
Not even close
Kospi hasn’t had a circuit breaker since 2020 during Covid and now they’ve had 4 YTD. This ain’t normal. To say the US market has no panic is untrue. Rate hikes, debt, inflation, Iran war, energy crisis. See June 5. Add that to bubble fears, including today’s news about OpenAI delaying IPO to try and grab more cash from the market. This whole thing is a ponzi
No keep buying MU 🚀
The KOSPI is in the limelight for the first time in history and unsurprisingly Koreans are aggressively trying to ride the wave. IMO this is a combination of locals levering up to buy and subsequently taking profits. The fundamentals of SKH, Samsung, micron, KXIA, are all pretty solid and I’m not too concerned. In fact, I’m long DRAM because we’re starting to see demand for memory from other parts of the market like robotics. But it is pretty wild to wake up to sizable drops in your positions when the companies are executing really well.
South Korea reliving our 1920s
Definite possibility. But if the fundamentals and future prospects remain solid but the stock price keeps dropping, wouldn’t you consider that a buying opportunity? Sounds like someone else’s margin call is my opportunity.