South Korean Stock Market Experiences 7 Circuit Breakers This Year: The Summer Ruined by Leverage for Young People
The South Korean stock market experienced an extreme crash and a wave of forced liquidations after a historic rally. In the past month alone, the entire market halted trading four times due to circuit breakers, surpassing records set during the 2008 financial crisis. The KOSPI index plummeted 32% from its peak, triggering widespread deleveraging. Over 1.2 million leveraged retail accounts faced margin calls, with hundreds of thousands fully liquidated, erasing trillions of won in investor deposits.
The article details the human cost through several stories. A celebrity lamented buying SK Hynix at a peak. A 24-year-old army veteran lost his entire 200 million won savings and 2.8 billion won in paper gains after a highly leveraged bet on a single stock. In a tragic incident, a disgruntled follower of a YouTube stock influencer stabbed the博主 after following his advice led to massive losses. Even a seasoned investor saw 1.5 billion won vanish in two months.
Despite the carnage, new retail investors continue to enter the market, often driven by FOMO (fear of missing out) and the perception that cash is a "waste" during a bull run. This speculative frenzy is partly attributed to President Lee Myung-bak's administration, which promoted stock market reforms to shift reliance from real estate and vowed to boost the KOSPI. However, soaring property prices have also pushed young Koreans toward high-risk, leveraged stock investing as their only perceived path to wealth accumulation.
The report concludes that while the market's future is uncertain, this cycle of policy-driven booms, leveraged speculation, and devastating busts is a recurring phenomenon in financial history, with Korean youth being its latest participants.
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