A few charts worth discussing
“Large performance dispersion can create opportunities for those trying to buy growth for free – looking beyond what everyone is chasing today.”
“Technology (hyperscalers) are now a larger portion of the U.S. corporate investment grade index than banks.”
Other charts worth pointing out
The effect of hyperscalers on investment grade index spread
U.S. consumer spending by income
U.S. IPO & SEO capital raised by year (adjusted for 2026 inflation)
S&P 500 Index momentum stocks vs. total index – market volume
Average S&P 500 Index stock vs. broad index price correlation
Hyperscalers & megacap Technology/Media/Telecoms – fund ownership
U.S. food prices
Crude prices
Credit spreads relative to historical levels by category
China-to-U.S. shipping container prices
‘A casino for retail investors’: how leverage is driving world’s best-performing market
Extreme volatility in South Korea’s world-beating stock market is alarming policymakers, who fear trading is being driven more by leverage than fundamentals after a rushed launch of single-stock derivative products tied to chipmakers Samsung Electronics and SK Hynix.
The unusually sharp swings in the world’s two largest memory chipmakers, which together account for half of the Kospi, prompted President Lee Jae Myung this week to order swift measures to curb what he called the products’ destabilising effects.
“Our domestic stock market is quite unstable,” Lee said at a policy meeting with top government officials in Seoul on Wednesday. “In fact, since it experienced a historically unprecedented massive surge in such a short period, it would require time and fluctuation to stabilise.”
The Kospi is on track to be the world’s best-performing major equity market for a second year, fuelled by demand for Samsung and SK Hynix’s AI chips. But doubts over the durability of AI spending have triggered a sharp correction, with the index falling 25 per cent from its June peak.
Leveraged exchange traded funds tied to Samsung and SK Hynix — which offer two times the stocks’ average daily return — have magnified the selling, with hedging and margin calls inflicting heavy losses on retail investors.
The Kospi whipsawed this week, plunging 16 per cent on Monday before rebounding more than 6 per cent on Wednesday and then falling another 6 per cent on Thursday.
Volatility has been so high that the stock exchange has paused trading 37 times this year, compared with just three during all of last year. More than half of the halts came after the debut of single-stock leveraged products in May.
“This is abnormal,” said Namuh Rhee, chair of the Korea Corporate Governance Forum. “Memory chips are a highly cyclical business with unpredictable demand. Allowing two-times leverage for retail investors in this sector is a serious policy blunder.”
While similar products exist in the US and other major markets, South Korea is unusual in the scale of its retail participation and the speed at which regulators approved the single-stock derivatives.
Brokerages rolled out 16 leveraged and inverse ETFs in late May after regulators gave them the green light. By then, shares of Samsung and SK Hynix had more than quadrupled in value in one year.
“It’s hard to see why regulators approved these products after the market had already risen so much,” said Kim Hyung-kyoon, executive director at Tcha Partners. “They’ve effectively created a casino for retail investors.”
Rhee said South Korea’s ETF market had become “distorted”, with brokerages and asset managers favouring higher-margin sector ETFs over broad-based products more common in the US. Single-stock products now manage about $8bn in assets, making up nearly half of all leveraged ETFs in South Korea.
Financial Supervisory Service governor Lee Chan-jin last month expressed regret over the single-stock products’ launch. “Looking back, I regret not doing everything I could to stop it,” he said.
In response to growing calls to curb volatility in its $4.1tn equity market, the government on Thursday said it would suspend new listings of single-stock leveraged ETFs.
It will also require retail investors to attend additional courses on risk management after rolling out training videos last year, and it will triple the minimum deposit for such products to Won30mn ($20,300) from 5 August.
Regulators blame the single-stock ETFs’ “short gamma” dynamics for the volatility. To maintain their target returns, fund managers and liquidity providers must aggressively buy shares as prices rise and sell quickly as they fall, exacerbating rallies and declines.
Goldman Sachs estimated SK Hynix’s double-digit fall on Monday forced leveraged funds to sell roughly $5bn of the stock to rebalance their portfolios, equivalent to about 18 per cent of combined trading in SK Hynix shares and futures that day.
The company’s $26.5bn US listing last week has raised concerns that South Korea’s leverage-driven swings could spill over into global markets. Several leveraged ETFs tracking the chipmaker’s American depositary receipts launched days after the US listing.
This week’s fun finds
For a cheese lover, Neal’s Yard may be heaven on earth. Enter the Covent Garden branch through its distinctively inky blue front, and you can be in no doubt as to what awaits. An enormous picture-frame window shows off at least a dozen truckles and wheels of cheese. Inside, low-hanging orb lamps glow softly, illuminating the startling array. Huge wheels of Stichelton and Stilton stand stacked on top of one another, their steel-blue veins facing out. Baron Bigod—the British Brie de Meaux (and, whisper it, better than the French equivalent)—oozes suggestively. Yorkshire Pecorino gleams pale, smooth, and yogurty. Wrinkly little Yr Afr, a raw-milk goat’s cheese, fresh from the foothills of Snowdonia, sits alongside bright orange pucks of Yarlington, its cider-washed rind sticky to the touch. Neat writing on large and small blackboards displays the cheese names, origins, and prices.
Randolph Hodgson, a food scientist, and Nicholas Saunders, an activist and entrepreneur, founded the Neal’s Yard dairy in 1979. In the earliest of days, it just produced Greek yogurt, the only thing they’d truly gotten the hang of. British cheese wasn’t really known in the UK, let alone on the world stage, and raw-milk cheeses were viewed with a healthy dose of skepticism—not least by those in charge of environmental health. But Neal’s Yard persevered.
Now there are five brick-and-mortar stores, each nestled in a different buzzy, food-loving part of London. Underneath the railway arches in Bermondsey, the cheeses of Neal’s Yard sit maturing in a beloved institution that has nurtured, connected, championed, educated, and sold around 550 tons of British cheese a year in every corner of the cheese world.
So it wasn’t beyond the realms of belief when a big, fat order came in for artisanal cheddar in 2024. A French supermarket wanted to purchase 950 truckles of the stuff, an order worth around $400,000. Three different dairies were called upon to help fulfil the massive request: Westcombe Dairy, making their eponymous cheddar in Somerset; the Trethowan Brothers, making Pitchfork Cheddar, also in Somerset; and Holden Farm Dairy, making Hafod Cheddar in West Wales. “British cheese has had a massive revival over the past 30 years, but unfortunately, it does feel like that has plateaued off a little bit,” Tom Calver, head cheesemaker at Westcombe Dairy, says. “To keep going, keep surviving, all throughout the whole chain, when an offer like that comes on, you jump on it.”
Twenty-two tons of artisanal British cheese, some of the most expensive cheese made in the UK. A huge order for Neal’s Yard. It seemed too good to be true.
