Commentary: Why the world’s hottest stock market is a national liability

South Korea's stock market has been experiencing unprecedented volatility, causing concern for the country's global reputation. This wild market behavior is driven by a large number of retail investors, particularly in the AI sector, making the market highly mercurial. The volatility of the Korean market has surpassed 60% this year, with peaks close to 100, a level never seen in any major country during good times or crises.

Despite its recent 35% decline, the market remains nearly three times higher than at the beginning of the rally, with earnings growth surging by 300% over the past year, primarily due to memory stocks. This market rally has made Korean stocks attractive, but extreme price swings continue to deter serious investors. The government's policies have inadvertently encouraged speculation, which has exacerbated the market's volatility.

While the government aims to address these issues, the country's high-risk trading culture and gambling tendencies pose challenges to attracting foreign investment. This situation not only impacts South Korea's economy but also casts a shadow on its global image as a reliable market.