{"text":[[{"start":7.24,"text":"The writer is chair of Rockefeller International. His latest book is ‘What Went Wrong With Capitalism’"}],[{"start":14.2,"text":"The world’s best-performing stock market this year is South Korea, but you wouldn’t know it from the headlines, which are all about its “crazy” price swings and fanatical local traders. The stock market’s wild ways have made it a national liability."}],[{"start":28.88,"text":"Korea’s market has been unusually jumpy for decades, in part because retail investors account for a large share of daily trading. Now the ups and downs of a market driven by AI companies are making it even more mercurial. The volatility of the Korean market is running above 60 per cent this year, with a summer peak near 100. Volatility of this magnitude has not been recorded before in any major country during good times, and rarely even in extreme crises."}],[{"start":58.12,"text":"South Korea is a market of increasingly unruly traders and a growing number of solid global brands. Koreans make much of what the world wants most, from defence systems to beauty products and the trendy content of K-dramas and K-pop, in addition to the memory chips that are in such heavy demand for AI data centres. Its market could make for rich pickings of high-quality companies, were it not roiled by such dramatic price moves."}],[{"start":82.1,"text":"South Korea’s stocks continue to trade at a steep discount to the rest of the world. This was long attributed to the cyclical nature of its leading industries, as well as the weak corporate governance of its large “chaebol” conglomerates. Recent reforms have attempted to address these flaws, including steps to limit the voting power of families that own them, make their directors beholden to shareholders rather than the company, and offer more protection to minority owners."}],[{"start":106.84,"text":"But the “Korea discount” endures, with extreme price swings continuing to scare away serious investors. The government is part of the solution, and the problem. Alongside market-boosting reforms, the authorities have promoted speculation in ways that are perhaps particularly surprising for a leftwing leader like President Lee Jae-myung."}],[{"start":125.86,"text":"Campaigning in 2025, Lee followed in the steps of several recent presidents by promising to eliminate the Korea discount, and setting an aggressive target for the benchmark Kospi index, which he promised to double in his first five years. That helped juice a rally so strong, it would shatter his “Kospi 5000” target in a matter of months."}],[{"start":147.8,"text":"Lee’s administration also opened the gates to risk-takers, allowing retail investors to buy into leveraged ETFs that hold single stocks like SK Hynix and Samsung, the semiconductor giants that drive the market — and its volatility. Lee sent another strong buy signal to the public by selling his own apartment with a plan to plough the proceeds into ETFs. When the market swoon came this summer, it was amplified by the unravelling of those heavily leveraged retail bets."}],[{"start":176.88,"text":"Even after its 35 per cent fall, the South Korean market was still nearly three times higher than at the start of the rally early last year — but with prices swinging off the charts. In the past 12 months, volatility in Korea rose to a level exceeded just four times since records began in the 1980s, with all four episodes hitting emerging markets — Nigeria, Turkey, Brazil and Greece — in years shaken by financial crises."}],[{"start":202.18,"text":"The breathtaking rally has been powered by a staggering 300 per cent surge in the stock market’s earnings growth over the past year, led by gains for the memory stocks, and has made up for decades of measly single-digit returns. Koreans saw their stock market wealth shoot up from $1.5tn to $5tn, gaining more in 18 months than they had in a lifetime."}],[{"start":226.72,"text":"Their enthusiasm for trading is on equally vivid display in global markets. Cryptocurrencies often sell in Seoul at what’s known as the “kimchi premium,” owing to intense demand from locals. When crypto prices surged in 2024, trading volume was actually higher in Korean won than in US dollars. As AI mania spread, Koreans poured billions into the markets not only at home but also in the US, where they form the largest cohort of foreign retail buyers."}],[{"start":254.22,"text":"After the summer correction, Lee’s administration took steps to restrain stock speculation, which has been linked to a broader gambling culture with hard-to-kill societal roots. Laws ban Koreans from most forms of gambling at home or abroad, and all but one of the nation’s 18 casinos are closed to locals. Yet they are known to drop billions a year in casinos online and across Asia. The government has cut lottery payouts to record lows, but sales keep surging to new peaks."}],[{"start":282.56,"text":"A recent paper by Hanyang University academics linked South Korea’s “marked preference” for high-risk “lottery-type” stocks to its rates of both gambling addiction and suicide, which are among the highest in the world. A trading culture that chases jackpots diverts capital from more productive investments, including the nation’s many solid companies. Those firms would attract more money from abroad too, if international investors were not so leery of the flighty market."}],[{"start":310.4,"text":"What happens in the world’s sixth-largest market matters far beyond its borders. With roughly 75 per cent of corporate earnings generated abroad, the Kospi has long been an early bellwether for global bull and bear markets. But its increasingly unhinged behaviour is undermining brand Korea."}],[{"start":331.96,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789974878_4798.mp3"}