South Korean stock market plunges, evaporating $1.7 trillion, retail investor losses spark backlash.

BlockBeats news, November 6 — South Korea's stock market has sharply retreated from its year-to-date high, with market capitalization evaporating by more than $1.7 trillion, triggering strong discontent among retail investors and putting President Lee Jae-myung's policy of shifting household funds from real estate to equities to the test.

Lee Jae-myung had promised during his election campaign to push South Korea's KOSPI index to 5,000 points. Driven by the AI investment boom, the index once hit an all-time high of 9,114.55 points, but has since continued to decline. On Friday, the index plunged as much as 8.8% intraday, falling below the 5,000-point mark, and has dropped more than 40% from its June high. Many retail investors say they heeded the government's call to give up home purchases and invest in stocks instead, only to suffer massive losses.

Meanwhile, Seoul home prices have risen for 91 consecutive weeks. One investor said that of the 40 million Korean won he put into a small-cap index fund, about 65% has evaporated. The market reversal is intensifying investors' doubts about government policy.