Daily Woody Weekly Review | Aug 1, 2026 — Seoul's Record 17.91% Rally
The Kospi opened the week at 6,755.75. On Tuesday it fell 10.84% and triggered the year's eighth circuit breaker. On Wednesday it fell another 5.98%, and for the first time both the Kospi and the Kosdaq halted trading on consecutive sessions. By Thursday's close the index stood at 5,593.56. On Friday it rose 1,001.89 points, or 17.91%, to 6,595.45 — the largest gain on record by both measures, and the first time the index has moved more than 1,000 points in a day. Over the three preceding sessions it had lost 17.20%, or 1,162.19 points. Friday recovered 86% of that in a single session. Net for the week: down 160.30 points, or 2.37%.
For scale: in its 130-year history the Dow Jones Industrial Average has never gained more than 15.34% in a day. Guinness World Records dates that mark to March 15, 1933.
The flows were records too. On the main board, foreign investors bought a net 7.22 trillion won (about $5.0 billion) while retail investors sold a net 8.25 trillion won. Both are all-time highs. Institutions bought 1.18 trillion won. Nearly four-fifths of the foreign buying went into two names, SK Hynix at 3.61 trillion won and Samsung Electronics at 2.12 trillion won. A buy-side sidecar fired on both markets six minutes after the open, suspending program buy orders for five minutes.
Brokerages tied the turn to the unwinding of Situational Awareness Capital, the fund run by former OpenAI researcher Leopold Aschenbrenner. It had carried roughly four times leverage in AI and chip positions, and margin calls caught it as prices fell. Citadel is reported to have taken on most of the book. KB Securities pointed to expectations that the deleveraging had run its course, with chip names leading the rebound.
Regulators are now looking at the plumbing. Program trading roughly doubled after leveraged exchange-traded funds tied to Samsung Electronics and SK Hynix listed. KED Global reports that financial authorities are now examining whether foreign high-frequency traders amplified the swings.
The borrowed money has not gone away. In a July 30 note, HSBC put retail margin loans at around 32 trillion won (roughly $22 billion), down about 15% from the June peak. Forced liquidations in July touched only 2% of outstanding margin accounts. Assets in single-stock leveraged products stood near $10 billion, a third of their peak. HSBC attributed most of that decline to falling prices, with redemptions playing a smaller part.
Two domestic decisions sit behind the size of the swings. The National Pension Service raised its domestic equity target from 14.4% to 14.9% on January 26 and suspended mechanical rebalancing. On May 28 it lifted the target to 20.8% and widened the permitted band from three percentage points to six. Pension funds bought a net 629 billion won during the two crash sessions. Some read that as a floor under the market. Others argue the higher target had already used up the selling capacity that would normally cap a rally on the way up.
The picture outside Korea has shifted too. Federal Reserve data for July 22 put the Treasury General Account at $835.4 billion, up $501.9 billion from the same Wednesday a year earlier. Bank reserve balances fell $293.5 billion over that span, to $3.065 trillion. The domestic reverse repo facility, once the shock absorber for those moves, held $376 million.
Korea permits exchange-traded funds that deliver twice the daily move of a single stock. Products tracking Samsung Electronics and SK Hynix listed on May 27. Most major markets restrict single-name leverage of this kind. From July 31 investors must hold 30 million won (about $21,000) in cash to trade them, up from 10 million won. Turnover in those products on the first day fell to roughly a quarter of the previous session's.
The index came back to within 2.4% of where it began, setting four records on the way. Around 32 trillion won of margin debt is still outstanding, and the buffers on both sides of the Pacific are thinner than they were a year ago.
Korea's trade ministry reported on Saturday that July exports rose 62.8% from a year earlier to $98.89 billion. That is the second-highest monthly total, behind June's $102.25 billion, the first month ever above $100 billion. Imports came to $68.56 billion, up 26.5%, leaving a trade surplus of $30.32 billion — above $30 billion for a second consecutive month. The surplus for the year to date stands at $168 billion.
Semiconductors carried it. Chip exports rose 178.8% to $41.01 billion, above $40 billion for a second month. Daily average exports were $4.12 billion, up 69.6%, on 24 working days, one fewer than a year earlier. Nineteen of the top twenty export categories grew. Home appliances was the only one that did not. Shipments to ASEAN at $18.8 billion and to the European Union at $9.38 billion were both records. Exports to the United States reached $17.43 billion, up 68.7%, led by chips and computers. Autos lagged as tariffs pushed production onshore. Energy imports rose 50.1% to $14.48 billion.
One line in the ministry's release is worth reading twice. It noted that contract memory prices kept climbing despite the prospect of Apple adopting Chinese memory and despite China's release of a new AI model. What drove Tuesday's selloff in Seoul was the Shanghai listing of the Chinese memory maker CXMT and news that Chinese-made immersion DUV lithography equipment had gone into production. Different items, the same theme of Chinese competition. Through July it had not shown up in contract prices.
Contract prices went up again in July. Whether the fear the market has already priced reaches the prices themselves will first be visible in August contracts.
The National Assembly passed an amendment to the Criminal Procedure Act on Friday. It removes prosecutors' authority to investigate, including the supplementary power they had retained. Of 178 members present, 175 voted in favour and two against, with one abstention. The opposition People Power Party did not take part. The PPP began a filibuster immediately after the bill was tabled on Thursday. The governing Democratic Party carried a cloture motion 24 hours later, at 4:06 p.m. on Friday. The DP had already shortened the session so that it would expire that midnight.
Under the amendment a prosecutor may only ask police to conduct further investigation. Police must finish within one month, extendable by one more. Complainants, victims and whistleblowers may appeal a decision not to refer a case for charging, and may read and copy the file. All investigative material must be logged in the national criminal justice information system.
Preparation lags the law. The new investigation agency has concluded it cannot build its own case-records system by October, and is developing a temporary one that borrows access rights from the police system. Two tenders failed before the work went out on a negotiated contract in May. The Corruption Investigation Office, launched in January 2021, kept its case records by hand for about seventeen months before its own system went into trial use.
The Comprehensive Special Counsel led by Kwon Chang-young questioned Jeong Won-ju, a former chief of staff to the head of the Unification Church, on Friday over an alleged cover-up of a gambling investigation. It was the first time the team had called him. The counsel's mandate ends on August 23. It has brought eight indictments since starting work on February 25.
Korea's Prosecution Service, created in 1948, has held both the power to investigate and the power to charge — a combination unusual among democracies and central to Korean political conflict for decades. On October 2 it is dissolved. Charging moves to a new Public Prosecution Office under the Justice Ministry; investigation of serious crime moves to a new agency under the Interior Ministry. Friday's bill removes what was left of prosecutors' investigative authority in the meantime.
The statute is finished and the institutions are not. Two months from now a 78-year-old agency closes on the same day two new ones open, and the system that will hold their case files is borrowed from another body.
A magnitude 7.1 earthquake struck Kumamoto Prefecture in southern Japan at 4:27 p.m. on July 28, at an estimated depth of 16 kilometres. Uki and Hikawa recorded shindo 7, the top of Japan's intensity scale. It was the first such reading anywhere in Japan since the Noto Peninsula quake of January 2024, and the first in Kumamoto since April 2016.
As of 3 p.m. on July 31 the prefecture put the death toll at 35, including one case still being assessed for a direct link. Seven died at an Aeon Mall where an explosion followed the quake; nine at a Nippon Paper plant in Yatsushiro where a chimney collapsed. Some 9,134 people were in 374 shelters, 1,590 households were without power and about 79,000 without water. Roughly 1,500 homes were damaged and more than 300 aftershocks of intensity 1 or above had been recorded.
Then came the heat. Daytime highs in the damaged areas passed 35°C, with some places forecast above 40°C. The Environment Ministry and the Japan Meteorological Agency issued heatstroke alerts. Forty-two residents were taken to hospital for heatstroke over two days from July 29, a count that excludes some areas. Chief Cabinet Secretary Minoru Kihara said rescue operations had ended everywhere except the mall site. Internal Affairs Minister Yoshimasa Hayashi asked the public to check claims circulating online against government and news sources.
The supply-chain damage showed up first in logistics. The transport ministry found liquefaction and ground subsidence at Yatsushiro port, the only harbour in southern Kyushu licensed to handle the compressed gases and chemicals used in chip fabrication. TSMC's Japanese unit restarted its first Kumamoto fab in stages after safety checks and resumed construction at the second. Huang Chien-chih of DigiTimes estimated that a week-long halt at the first fab would reduce TSMC's third-quarter revenue by about 0.03%.
People who survived the collapse met the next hazard within 48 hours. The rescue phase is largely over; the water is still off and the heatstroke count is still rising.
American strikes on Iran, paused on July 25, resumed on July 29 local time. US Central Command said it hit Revolutionary Guard command posts, missile and drone facilities and coastal surveillance sites over roughly two hours. It described the operation as a response to Iranian attacks on American bases in the region. Iranian state media reported that a house on Qeshm Island in the Strait of Hormuz was struck, killing a family of three including a two-year-old.
During the three-day pause the front widened. On July 28 Central Command and the Saudi defence ministry announced they had spent 72 hours striking Iran-aligned militia sites in eastern Iraq. On July 29 drones hit two LNG vessels moored at Damietta on Egypt's Mediterranean coast. Fire began on the American-owned floating storage unit Energos Winter and spread to the Greek vessel GasLog Salem. No party claimed responsibility. The New York Times noted the attack came while Saudi Arabia was shipping oil to Asia via the Mediterranean and the Cape of Good Hope to avoid Houthi threats in the Red Sea.
On July 30 the Revolutionary Guard said it had struck the Al-Azraq air base in Jordan and Ali Al Salem in Kuwait, destroying three F-35s. The US military said claims that six aircraft had been destroyed or damaged were false. On July 31 the Guard said it attacked two tankers under US Navy escort in the Strait of Hormuz.
Brent for September settled at $90.12 a barrel on Friday, up 1.22% on the day and 6.9% on the week. West Texas Intermediate settled at $84.67, up 5.2% on the week.
As the fighting moves from the Gulf to the Red Sea and now to the Mediterranean, the share of incidents with no identified attacker is rising. The route Saudi Arabia chose to avoid one threat has now seen an attack of its own.
- [Money Today] Japan and the United States intervened in the currency market on July 30, buying yen and selling dollars; the yen strengthened to 157.80 per dollar intraday in New York and US authorities carried out a rate check. The Bank of Japan held its policy rate at 1% on July 31, with eight of nine board members in favour. Read ↗
- [Straight News] The Federal Reserve held rates for a fifth consecutive meeting on July 29. Nine of twelve voted to hold; Hammack, Kashkari and Logan dissented in favour of a quarter-point increase. June's vote was unanimous. Read ↗
- [Investing.com] China's official manufacturing PMI fell to 49.2 in July from 50.3 in June, below the 50.1 consensus and its first contraction since February 2026. The non-manufacturing index fell to 49.0 from 50.2. Read ↗
- [Kyunghyang Shinmun] The Seoul Central District Court on July 27 sentenced former president Yoon Suk Yeol to 18 months in prison, suspended for three years, for false statements made during the 2022 presidential campaign. If the verdict is upheld, the People Power Party must return 39.7 billion won (about $28 million) in reimbursed campaign costs. Yoon has appealed. Read ↗
- [Financial News] The two main parties agreed on July 30 on a special counsel bill covering the ballot-paper shortage at June's local elections, and extended the parliamentary inquiry committee by 30 days to permit a recount of ballot boxes held at the Olympic Park counting centre. Read ↗
- [Aju Business Daily] A bill cutting the fast-track review period from as long as 330 days to 90 carried over to the August session after the July session expired at midnight on the 31st, which ended the filibuster automatically. The Democratic Party is targeting a plenary sitting on August 13. Read ↗
Samsung Electronics reported audited second-quarter results on July 30, with operating profit of 89.5 trillion won (about $63 billion), a third consecutive record. Its chip division posted its highest quarterly revenue and operating profit. On the analyst call the company said the memory shortage would be deeper next year than this year.
The market held the gain for about an hour. The Kospi rose as much as 5.54% to 5,976.82 while the call was running, then gave it all back to close down 1.23% at 5,593.56. Samsung itself traded 8.39% higher during the session and closed 0.72% lower at 207,000 won.
Circuit breakers halted trading for a second straight day on July 29. Later that day Finance Minister Koo Yun-cheol chaired an emergency market-monitoring meeting and capped individual holdings of single-stock leveraged ETFs at 20% of an investor's total financial assets. Regulators are also weighing flexible leverage multiples and fees on excessive order traffic.
A separate measure agreed on July 16 took effect on July 31, lifting the minimum cash deposit for trading these funds from 10 million won to 30 million won. On the first day, turnover in products linked to Samsung Electronics and SK Hynix fell to about a quarter of the previous session's. The funds listed on May 27 and have been cited repeatedly in discussion of how often sidecars have been triggered since.
The start date happened to fall on the day the index rose 17.91%. Retail investors took profits heavily as leveraged product prices climbed.
The Korea Meteorological Administration's 11 a.m. bulletin on Saturday forecasts continued heat and tropical nights across most of the country. Central regions will see occasional cloud on Saturday while the south and Jeju stay mostly clear. Cloud in central areas clears from the morning on Sunday and Monday, and Tuesday will be mostly clear nationwide apart from the Gangwon east coast, with cloud returning to the south and Jeju after dark.
| Sat 1 | Sun 2 | Mon 3 | Tue 4 | |
|---|---|---|---|---|
| Low | 22.4–30.2°C | 21–28°C | 23–27°C | 23–27°C |
| High | 32–39°C | 32–39°C | 32–38°C | 31–37°C |
No rain is forecast nationwide over the period. With highs reaching 39°C in places, heat illness is the main risk. Typhoon Dolphin is tracking north past the waters east of Guam; the KMA says it is too early to judge whether it will affect the Korean Peninsula and is watching its track and intensity.
- Monday, August 3
- Japanese Prime Minister Sanae Takaichi's visit to Kumamoto under arrangement · Honda decides whether to restart its Kumamoto plant
- Tuesday, August 4
- July consumer prices from Korea's national data agency. June came in at 3.2% year on year, the fastest since December 2023, following 3.1% in May.
- August 3–7
- End-July foreign exchange reserves (date to be confirmed)
- Friday, August 7
- US July non-farm payrolls
- During August
- Earnings from Palantir, AMD and SanDisk · price stabilisation bill expected
- Thursday, August 13
- National Assembly plenary sitting targeted for the fast-track reform bill
- Monday, August 17
- Democratic Party convention elects a leader and five supreme council members
- Sunday, August 23
- Comprehensive Special Counsel mandate expires
What broke Seoul's market on Tuesday was the Shanghai listing of the Chinese memory maker CXMT and news that Chinese-made DUV lithography equipment had gone into production. What turned it around on Friday was Microsoft's earnings. Then on Saturday morning the trade ministry reported that July semiconductor exports rose 178.8%, and named China's move into memory and its new AI model among the variables it had weighed. Those belong to the same family of worry that made Tuesday. Contract prices went the other way.
The rules changed in the same week. On July 29 the finance ministry capped single-stock leveraged holdings at 20% of an investor's financial assets, and from July 31 the required cash deposit tripled. On the same day parliament took away prosecutors' power to investigate. The first two set conditions for the next selloff. The third sets a condition for every criminal case filed after October 2.
The index finished 2.4% below where it started. Only the number came back. The rules that changed in between are still in place, and they begin working on Monday.
Anthropic's Claude AI is used as a tool in gathering, analysing and editing the news. Readers are encouraged to apply their own judgement and cross-check.
© 2026 Daily Woody
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