Marko Kolanovic, the former JPMorgan chief strategist known as one of Wall Street's most prominent bears, has been repeatedly warning of a bubble in the Korean stock market. Kolanovic left JPMorgan after maintaining sell recommendations during the 2023-2024 bull market.
Kolanovic has been posting his bubble thesis on X (formerly Twitter) since May 20 (local time). "Korea's stock market has doubled while the U.S. market is declining," he wrote. "Capital expenditures by U.S. hyperscalers are sending Trump's squeezed money out of America and into Korea."
He added: "The M7 are investing capital in KOSPI companies, and U.S. investors are pulling capital out of M7 to send to Asia. U.S. semiconductor companies are also mostly manufacturing in Asia through Samsung Electronics, Kioxia, and TSMC, so 'MAGA' is happening in Asia."
On May 25, Kolanovic pointed to KOSPI's recent rally chart, arguing the index is overbought. "It took 40 years for KOSPI to rise from 1,000 to 2,000, but it gained 4,000 points in just a few months—equivalent to more than 100 years of historical average returns," he wrote. "I'm curious about the mindset of people who think buying now is a good idea. There's a very high probability that investors buying today will never see these levels again in their lifetime."
His bubble warnings continued the following day. "There's a significant possibility that KOSPI, which surged nearly 4% last night, is a blow-off top," he wrote, noting that while the index rose on Nvidia's earnings news, Nvidia's own stock fell. A "blow-off top" refers to a pattern where prices and trading volume spike sharply before an even steeper decline follows.
"Retail investors are buying while foreign institutions are selling," he added. "There's a possibility KOSPI will crash tonight (daytime in Korea)." Contrary to Kolanovic's crash warning, KOSPI closed that day at 6,244.13, down just 1%.
He also targeted SK Hynix, arguing its valuation is excessive. Regarding the memory supply shortage, Kolanovic said: "It's like selling a bottle of water for $100 to someone in the desert during a temporary water shortage. Eventually, most water will sell for $1 per bottle, but some strategists are valuing not just stocks or countries (the KOSPI index) but the entire MSCI Emerging Markets index based on that $100 bottle of water."
Kolanovic was once a star strategist dubbed the "Gandalf" of the stock market. However, he called for bullishness when the S&P 500 fell 19% in 2022, then maintained his bearish stance during the 2023-2024 surge. He departed JPMorgan in July 2024. At the time, Bloomberg noted that "Kolanovic had offered near-disastrous, misguided investment strategy on the stock market for two years."