South Korea's KOSPI Plunges 9.7% on June 23, Nomura Warns of U.S. Leverage ETF Chain-Reaction Selloff Risk

According to Reuters and Nomura's quantitative team, South Korea's stock market experienced a severe selloff on Tuesday, June 23, with the KOSPI index dropping 9.7% — its largest single-day decline in three months. Samsung Electronics and SK Hynix plummeted over 10% each, triggering trading halts lasting 20 minutes. Market regulators acknowledged that hastily-approved leveraged ETFs linked to these semiconductor giants exacerbated volatility and speculative trading.

Nomura's cross-asset strategy team warned that similar leverage-driven risk structures are accumulating in U.S. equity markets. If volatility continues rising, leveraged ETF rebalancing operations could trigger mechanical chain-reaction selling. Nomura's model estimates that forced selling by U.S. leveraged ETFs could reach tens of billions of dollars, concentrating pressure in the final hour before U.S. market close. The firm highlighted this as a structural tail risk independent of fundamentals.