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Kospi Tops 5,000 Mark Amid Sharp Swings, Leverage Surge and Fed‑Chair Turmoil

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  • The closing benchmark Korea Composite Stock Price Index is seen on a screen inside the dealing room of Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    The closing benchmark Korea Composite Stock Price Index is seen on a screen inside the dealing room of Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    Image: Yonhap
    The closing benchmark Korea Composite Stock Price Index is seen on a screen inside the dealing room of Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap) Source Full size
  • The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    Image: Yonhap
    The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap) Source Full size
  • The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap)
    Image: Yonhap
    The opening benchmark Korea Composite Stock Price Index (KOSPI) is displayed on a screen inside the dealing room in Hana Bank in central Seoul on Feb. 2, 2026. (Yonhap) Source Full size

Milestone Crossing Highlights AI‑Driven Growth On Feb 5 2026 the Korea Composite Stock Price Index broke the 5,000 threshold and total market capitalization exceeded 5,000 trillion won (≈ $3.42 trillion), a milestone the market framed as evidence of Korea’s AI‑driven expansion and global capital appeal[1].

Circuit Breakers Triggered as Index Volatility Spikes Within 48 hours the index fell 5.26 % triggering a halt, rebounded 6.84 % the next day causing a second halt, and closed above 5,280 before slipping again; the VKospi volatility index rose above 50 and margin‑lending balances topped 30 trillion won, while idle investor deposits hit a historic 110 trillion won[1].

“Warsh Shock” Fuels Global Risk Aversion and Won Weakening President Donald Trump’s nomination of Kevin Warsh to lead the Federal Reserve sparked a coordinated “Warsh shock” that drove Korean stocks below 5,000 on Feb 3, pulled the won down to about 1,449 per dollar, and sent gold down more than 10 % and silver about 30 % lower, mirroring declines in U.S. equity indices[2][3][4].

Chip Concentration and Retail Margin Limits Raise Systemic Concerns Samsung Electronics and SK hynix together account for roughly 40 % of the Kospi, creating fragility that could transmit semiconductor setbacks to the broader market; brokerages such as KB Securities and Korea Investment halted fresh margin loans as retail investors now dominate half of Kospi trades and 84 % of Kosdaq activity, prompting calls for broader institutional participation and capital‑market reforms[1].

Sources

Timeline

Dec 14, 2025 – The KOSPI opens at 4,080.01, down 2.09%, as renewed AI‑bubble worries push Samsung Electronics ‑3.4% and SK hynix ‑3.85%; the won trades at 1,477.4 per dollar, weakening 3.7 won, while U.S. markets tumble on a weak Broadcom outlook and President Trump “says Warsh largely agrees with his stance on further rate cuts”[5].

Feb 2, 2026 (early trade) – The KOSPI falls 1.05% to 5,169.36 within the first 15 minutes after the Fed chair nomination, mirroring a 0.43% dip in the S&P 500 and a 0.94% slide in the Nasdaq; gold drops >10% and silver ~30%, Microsoft shares tumble on a cloud‑revenue miss, and the won weakens to 1,449.5 per dollar[4].

Feb 2, 2026 (mid‑day) – The KOSPI plunges 5.26% to 4,949.67, ending a four‑session rally, as traders react to the Warsh nomination and a sharp fall in precious metals; Prime Minister Kim Min‑seok says “we are making headway on tariff‑related issues” in talks with the United States; “Golden” from KPop Demon Hunters wins a Grammy, former first lady Kim Keon Hee files an appeal of her 20‑month sentence, and Canada’s defense procurement chief Stephen Fuhr inspects Hanwha Ocean’s shipyard, influencing the 2026 Canadian Patrol Submarine contract decision[3].

Feb 3, 2026 – Korean dailies report the KOSPI slips below 5,000 in a coordinated “Warsh shock” event, noting a >5% slide that underscores the Fed nomination’s global impact; the Democratic Party debates a merger amid “insurrection versus insult” rhetoric, while real‑estate mogul Lee pours money into property and small merchants protest an influx of Dubai chewy cookies, and vacant public housing units persist a year after construction[2].

Feb 5, 2026 – The KOSPI breaks the 5,000‑point barrier and market cap tops 5,000 trillion won, touted as proof of Korea’s AI‑driven growth, yet two circuit‑breaker halts occur within 48 hours as the index swings ±6%; the “Warsh shock” amplifies stress, VKospi volatility exceeds 50, margin‑lending balances hit 30 trillion won and deposits sit at a historic 110 trillion won, prompting brokerages to curb new margin loans and raising systemic risk concerns as Samsung and SK hynix together account for ~40% of the index[1].

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