Bank of Korea warns AI chip leverage threatens markets

The Bank of Korea has warned that concentrated and leveraged trades linked to Samsung Electronics and SK Hynix could increase financial-market volatility if demand for artificial intelligence chips weakens. Summary Bank of Korea warned leveraged semiconductor trades could amplify volatility across domestic and overseas markets. Samsung Electronics and SK Hynix together represent nearly half of the benchmark Kospi’s market capitalization. Hong Kong-listed leveraged products tied to Korean chipmakers expanded more than twentyfold during 2026’s first-half. South Korea’s second-quarter real GDP grew 0.6%, while nominal output increased much faster year-over-year officially. The central bank raised its 2026 growth forecast to 2.6% as chip exports strengthened sharply. Bank of Korea’s September monetary policy report, published on Sept. 10, examined the country’s semiconductor-led expansion alongside rising asset prices, household borrowing and changing conditions in overseas financial markets. You might also like: Bank of Korea tests tokenized reserve transfers through BIS Project Agora Bank of Korea connects AI chip trades to market risk Samsung Electronics and SK Hynix now account for nearly half of the Kospi’s market capitalization, according to the central bank’s analysis reported by the Wall Street Journal. Their earnings and share prices have become closely tied to global spending on AI infrastructure. The concentration gives both companies an unusually large influence over South Korea’s benchmark index. Price moves in the two chipmakers can affect index funds, derivatives, retirement portfolios and structured products linked to the Kospi. Overseas leverage has created another channel. The value of Hong Kong-listed leveraged exchange-traded products tied to Samsung and SK Hynix increased more than twentyfold during the first half of 2026, the Wall Street Journal reported. Such products use derivatives to multiply the daily return of an underlying stock. A two-times long fund seeks twice the daily gain, while an inverse product can rise when the referenced share falls. Daily rebalancing can require fund operators to buy into rising markets and sell during declines. The Bank of Korea warned that rapid adjustments by large products could reinforce price movements and transmit volatility between overseas trading venues and Seoul. Several products reportedly used leverage of up to four times while opening and closing positions connected with global memory-chip companies. The central bank did not identify an immediate failure or announce enforcement action against a particular fund. South Korean authorities have already responded to volatility linked to single-stock products. The government announced proposed restrictions in July that could cap an individual’s allocation to leveraged single-stock ETFs at 20% of investment assets. The planned rules followed sharp changes in domestic technology stocks and forced adjustments by leveraged funds. Authorities have not said the restrictions will remove all market risks tied to overseas products.