BlockBeats News, August 8, 2026

Since July 2026, the South Korean stock market has undergone a severe correction. Investors who had previously bet on the AI industry chain suffered significant losses. Some individual investors who used leveraged ETFs and margin trading faced forced liquidation pressure.

Data shows that the South Korea Composite Index dropped from its highest point of 9385.59 on June 19 to its lowest point of 5262.77 on July 29, representing a drop of nearly 44% in over a month. The semiconductor sector was hit hard during this correction, with SK Hynix's stock price plummeting from a high of 298.7 Korean won on June 25 to a low of 128.7 Korean won on July 29, marking a maximum drawdown of about 57%. Samsung Electronics also experienced a drop of over 49% during the same period.

With the rising trend in the AI storage market, South Korean individual investors had heavily poured into semiconductor stocks and leveraged ETFs. Some investors used 2x leveraged products to chase the gains of SK Hynix and Samsung Electronics. However, when the market reversed, the leverage effect magnified their losses.

According to Shenwan Hongyuan data, since South Korea introduced 2x leveraged ETFs for individual stocks on May 27, the scale of related leveraged funds rapidly expanded. Subsequently, due to the substantial shrinkage in the tech sector, the product's scale retreated by 71.6% from its peak. South Korea's margin financing balance also dropped to approximately 270 trillion Korean won, returning to the level at the beginning of 2026.

Market participants pointed out that when the stock index falls rapidly and margin accounts touch the margin call line, investors who cannot add funds will trigger forced liquidation. The selling pressure from forced liquidation further depresses stock prices, creating a negative feedback loop of "decline - liquidation - continued decline."

Some investors went from doubling their profits to incurring huge losses. One investor had bet on SK Hynix using a 2x leveraged ETF, with the account's floating profit exceeding 100% at one point. However, after the market reversal in July, the investor ultimately suffered a loss of nearly 50%. Another South Korean investor, heavily invested in SK Hynix, experienced a loss of over 60% in their account.

Analysts believe that behind this round of the South Korean AI stock frenzy is not only the semiconductor industry's cyclical upturn but also individual investors' participation in high leverage and the nationwide stock trading craze. As the market cools down, South Korea's regulatory authorities have raised the threshold for leveraged ETF investments to reduce the risk of leveraged trading amplifying market volatility.