South Korean stocks dropped for a third day as Samsung Electronics Co. better-than-expected earnings failed to calm market jitters and the government announced additional measures to curb demand for leveraged exchange-traded funds.
The benchmark Kospi Index slipped 1.1% after slumping a combined 16% over the two previous sessions. Samsung shares fell 1% even after saying net income jumped more than 250-fold in the June quarter. SK Hynix Inc. dropped 6% after losing almost a quarter of its value in the past two days.
Top officials from the finance ministry, Bank of Korea and financial regulators held an emergency meeting late Wednesday and pledged additional measures to stabilize the stock market and curb retail access to leveraged ETFs after the two-day rout wiped billions of dollars off investors’ holdings.
New measures included limiting retail involvement in leveraged ETFs by capping exposure at a set share of investors’ total portfolios and raising trading costs, the finance ministry said.
“Those measures may help ease the market’s volatility in the future but they are not the measures that could reduce the declines at the moment,” said Kim Dojoon, chief executive officer at Zian Investment Management. “The problem is there are no buyers in the market. We need new buyers, whether that’s the stock stabilization fund that can provide support. Giving signal that the market has buyers, that’s first.”
The Kospi has slumped about 40% from its June peak, with losses deepening this week as investors questioned the durability of the artificial intelligence trade. The declines triggered a market-wide circuit breaker on the Kospi for an unprecedented second straight day on Wednesday.
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