Global Market: South Korea's AI-driven stock frenzy fuels volatility, challenges market fundamentals

South Korea's KOSPI index has seen unprecedented volatility this year, with over half of all circuit breakers in its history triggered in the past six months amid an AI-driven stock frenzy fuelled by leveraged single-stock ETFs concentrated in Samsung Electronics and SK Hynix. South Korean regulators have responded by halting approvals for new leveraged ETFs and tripling the minimum cash balance for trading such products to 30 million won from August 5. Despite the speculative surge, valuations of Samsung and SK Hynix remain subdued with PE ratios below five, and SK Hynix recently completed a record 26.5 billion dollar US capital raise by a foreign company.