A Korea Exchange (KRX) employee monitors stock market data on a computer screen in the Yeouido financial district in Seoul, South Korea, on May 11, 2026.
Chris John | Null Photo | Getty Images
South Korean retail investors who put money into leveraged bets on the country’s AI champions are left with huge losses after a sharp reversal, exposing the risks of a speculative trading boom that underpinned one of the world’s hottest stock markets.
The pain was especially acute for holders of single-stock leveraged exchange-traded funds tied to semiconductor giants Samsung Electronics and SK Hynix. Both companies soared with the AI-driven rise in semiconductor prices, but are now declining.
Since the introduction of single-stock leveraged ETFs on May 27, Korean retail investors have purchased a net amount of 14 trillion won ($9.4 billion), compared with about 2 trillion won from overseas investors, according to KB Financial Group.
So far, it hasn’t worked out too well for them. The KODEX SK Hynix Single Stock Leveraged ETF, a product designed to double the daily movement of SK Hynix stock, is down about 70% from its all-time high set in June and about 50% from its opening price, according to LSEG data.
South Korea’s online trading forums were awash with lamentations, especially after SK Hynix’s record one-day drop last week.
“I want to go back to where I was before I started investing in stocks. Please give me my money back,” one investor wrote.
“You’re going to kill me,” said another.
Despite analysts insisting the memory chip maker’s long-term prospects are intact, the losses highlight how South Korea’s retail investment culture is magnifying volatility at the country’s tech giants.
Individual investors bear the brunt
“The investors bearing the losses are overwhelmingly domestic individual investors,” said Chung In-yun, founder of Fibonacci Asset Management.
Leveraged ETFs are also rapidly growing as a share of South Korea-focused funds, with the share of assets in South Korea’s 25 largest leveraged ETFs rising from about 15% at the beginning of 2026 to about 30% by June, according to data from Oxford Economics.
The economic advisory firm downgraded South Korean stocks to neutral at the end of June, warning that leveraged positioning has expanded significantly and that brokerages may become increasingly reluctant to extend credit to retail investors.
Jung said the buyers are not just novice traders chasing online hype. Many of them are investors in their 40s and 50s who are increasingly used to leveraging and making intensive technology bets.
In a report released last month, the Central Bank of Korea warned that leveraged stock investments by individual investors have reached record levels, mainly due to margin borrowing and the concentration of semiconductor positions.
While the Bank of Korea said the buildup was unlikely to pose a systemic threat to the financial system, it warned that leverage could increase volatility during market corrections, especially if fear of missing out causes investors to chase gains with borrowed money.
Regulatory notice
Regulators are also paying attention. South Korea on Thursday announced stricter rules for single-stock leveraged exchange-traded funds (ETFs) in a bid to curb speculative retail trading after the stock prices of Samsung Electronics and SK Hynix plummeted. Under the new measures, investors will be required to deposit a minimum of 30 million won in cash to trade products, up from the previous effective minimum of 3 million won.
Peter Kim, head of global investment strategy at KB Financial Group, said the losses highlight how single-stock leveraged ETFs are becoming more of a speculative trading vehicle than a long-term investment.
“There is no sign of a large-scale market rescue by Korean retail investors, but if ETF overhang and recession and volatility continue, it could lead to a long-term recession,” Kim told CNBC in an email.
But some market veterans say the unwinding could still take some time.
Thomas J. Hayes, chairman and managing member of Great Hill Capital, said memory chip stocks have become the most crowded trade on the market for both institutional and individual investors.
“Semiconductors and memory are the most crowded world trade in terms of institutional investors and retail positions. It’s over,” Hayes said. At least one hyperscaler other than Meta said it “needs to ease capex commitments in Q2 earnings guidance. We’ll see semi and memory congestion become just as aggressive as ‘congestion’ in the coming months.”
