South Korea’s rookie investors lose small fortunes amid AI stocks frenzy
Summary
South Korea’s stock market rose sharply early in 2026 largely due to high demand for memory chips, encouraging many first-time investors to buy shares. However, the market then dropped nearly 40 percent, causing significant financial losses for these investors, including Eun-bi, a civil servant who planned to use her investment for her wedding. The market’s volatility is linked to heavy reliance on a few chip companies and increased use of borrowed money to buy stocks.Key Facts
- South Korea’s KOSPI stock index more than doubled by the end of June 2026, driven mainly by chipmakers Samsung Electronics and SK Hynix.
- The KOSPI reached a high of 9,385.59 points on June 19, then dropped nearly 40 percent from that peak by the end of July.
- Millions of South Koreans, including many first-time investors, lost money as the stock market fell sharply after a big rally.
- The government, led by President Lee Jae Myung, promoted greater citizen investment in the stock market and allowed riskier financial products.
- The value of margin loans (money borrowed to buy stocks) peaked at 38.6 trillion won ($27.6 billion) in June before falling to 28.9 trillion won ($20.7 billion) in July due to forced sales.
- Leveraged exchange-traded funds (ETFs), which amplify stock price movements, were introduced in late May just before the market downturn.
- Regulators increased cash requirements for trading certain risky ETFs in late July to try to reduce market risk.
- The high concentration of the stock market in the semiconductor sector makes the market very sensitive to changes in chip demand.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.
