~ The whipsaw moves in South Korean stocks last week were textbook examples of a bubble, Bank of America’s equity strategists say.

~ The analysts pointed to the 12% drop in the Kospi index that was followed by a 10% rebound, which they say resembled the extreme instability seen during the Asian financial crisis, the dot-com bubble and the 2008 global financial crisis

~ Bank of America has a measure it calls the “bubble risk indicator,” which distills an asset’s returns, volatility, momentum and fragility into a single reading from 0 to 1, with 1 representing extreme bubble-style price action. The Kospi’s bubble-risk-indicator reading is at extreme levels, the strategists say, and there are also frothy dynamics in the options market

~ “Anecdotes around the role of Korean retail participation in the historic rally — with leverage (including via levered & inverse ETFs) — only reinforce the textbook bubble-like environment observed in the Kospi las…