Korea's Stock Market Plummets for Two Consecutive Days, Breaking 5,300 Points! Government Declares 'No Market Rescue' Amid Retail Investors' Fury

On Tuesday (29th), the Korean stock market experienced another sharp decline, with the composite index (KOSPI) plummeting over 12% at one point, breaking the 5,300-point mark. This is the second consecutive day that the circuit breaker mechanism has been triggered, and KOSDAQ also suspended trading for 20 minutes. As of Tuesday, the KOSPI has retreated over 43% from its historical high in June, and market panic is rapidly spreading.

Facing massive losses for retail investors and public opinion pressure, Kim Yong-beom, the chief of the policy planning office at the Blue House, stated in Sao Paulo that the government is closely monitoring the market. 'We are not yet at the stage of activating the stock market stabilization fund,' he said.

Kim Yong-beom characterized this sharp decline as a 'reassessment process' in which the market is seeking equilibrium, emphasizing that the actual demand for AI and semiconductors is not a temporary phenomenon, and the current decline 'is not a crisis that requires government intervention.'

Kim Yong-beom pointed out external factors, including the expansion moves of Chinese memory chip companies such as ChangXin Memory Technologies (CXMT), and market concerns about whether large-scale investments in AI can be translated into actual revenue. He also attributed the high volatility of Korean stocks to the excessive activity of retail trading, the proliferation of derivatives and leveraged ETFs, and the high market share of Samsung Electronics and SK Hynix, which causes the KOSPI and the semiconductor index to be highly correlated.

He also specifically distanced himself from the responsibility of leveraged ETFs, stating, 'We cannot attribute all problems to one cause,' and that the Financial Services Commission and the Financial Supervisory Service will review the system from a more macro perspective.

Kim Yong-beom's 'market self-regulation' remarks have sparked strong backlash in South Korean online communities. Critics have dug up old accounts of the current government's early tenure, when it loudly proclaimed targets of 'KOSPI 5,000, even 9,000,' and encouraged retail investors to enter the market, criticizing them for 'government hype attracting retail investors and then passing the buck to the market' when the market crashes.

Reports from Korean media such as Fntoday pointed out that investors left angry comments saying, 'You encouraged us to enter the market, and now you say this is someone else's problem.' Some netizens also expressed dissatisfaction with President Lee Jae-myung's silence on the crash.

Analysts expect that as margin calls and forced liquidation pressures continue, the wave of accountability for 'creating but not protecting the market' from retail investor groups and the opposition party will further intensify. The 'reassessment' mentioned by the Blue House is turning into a dual pressure test for both politics and the capital market.