The South Korean stock market has experienced a "from euphoria to despair" moment, with retail leveraged investors losing billions of dollars.

BlockBeats News, August 23rd. According to Reuters, the South Korean Composite Stock Price Index (KOSPI) has dropped 30% from its high on June 19th. The stock market frenzy, previously driven by the AI boom and leveraged funds, quickly turned into pessimism. The South Korean government initially planned to eliminate the "Korean discount" by introducing more investment tools and improving corporate governance. However, the drastic market fluctuations have called into question the effectiveness of the policy and investors' risk tolerance.

On May 27th, the South Korean regulatory agency allowed the listing of single-stock leveraged ETFs. Investors only need to complete a one-hour training session and deposit at least 10 million Korean won to participate. Meanwhile, both Samsung Electronics and SK Hynix reached market capitalizations of over $1 trillion, driving the KOSPI up by over 100% from October last year and breaking through 8000 points. Retail investors borrowed heavily to chase the AI trend, with KOSPI's margin balance increasing by about 75% during the year and reaching a record high of 29.8 trillion Korean won on June 24th.

As Samsung Electronics and SK Hynix collectively account for over 53% of KOSPI's total market capitalization, related leveraged products further amplified market volatility. In early July, the South Korean fear index VKOSPI rose to 97.99, reaching its highest level since data collection began in 2009. Citigroup estimated on July 28th that retail investors lost $38.7 billion on leveraged ETFs.

The market correction has also brought social pressure. A psychiatrist in Seoul reported that the number of stock investment-related patients he treated increased from 7 to 8 people daily last year to an average of 11 people daily since June this year. The Busan police also arrested a man in his 20s suspected of stabbing a YouTuber, blaming his stock losses on the YouTuber. Currently, the South Korean authorities have tightened restrictions on individual investment in leveraged ETFs. Analysts believe that excessive volatility may also affect South Korea's goal of being included in the MSCI Developed Markets Index.