Article | Galiu, BeatZ Up

Update on July 31: After two consecutive days of circuit breakers, the Korean stock market today saw a violent rebound. The KOSPI is currently at 6,595.45, up 17.91% from the previous close; SK Hynix is up 29.95% at limit up; Samsung Electronics is up 26.81%. The wreaths outside the South Korean National Assembly should probably be taken down now, right...?

What goes up must come down.

The Korean stock market is always a one-night paradise and the next night a hell, transforming from the "world's hottest stock market" to the "biggest stock disaster" in less than a month.

How crazy is the Korean market? The KOSPI index has experienced a total of 15 circuit breakers in history, with 9 occurrences this year alone, including 4 in July. On July 28 and 29, the KOSPI even triggered a Level 1 circuit breaker for two consecutive days.

When Korean netizens reach a certain level of breakdown, they are already too exhausted to resist, even turning their own tragedy into a joke just to muster the strength to keep track of the market.

Let's Go for the Three-Peat Together

The so-called "three-peat" is a joke coined by Korean stock investors these past two days. Since they have already had two consecutive circuit breakers, why not add one more day to achieve a "hat trick" of circuit breaks.

To understand how absurd this joke is, you first need to look at a set of statistics about circuit breakers in the Korean stock market.

In the Korean stock market, circuit breakers were originally designed for "historic disasters." If the index drops by 8% in a day and remains there for one minute, a Level 1 circuit breaker is triggered, halting the entire market for 20 minutes. From the first implementation of this mechanism on the KOSPI in 2000 to the end of 2024, over a span of 25 years, it has only occurred 6 times: during the 2000 Internet bubble, 2001 9/11, 2020 COVID-19, and the "Black Monday" of 2024 due to the yen carry trade unwinding. Each event behind the circuit breakers has been significant enough to be written into textbooks.

By July 29, 2026, the circuit breaker had been triggered 9 times throughout the year. In July alone, there were 4 instances of circuit breakers (on the 7th, 13th, 28th, and 29th). Out of the 15 historical circuit breaker events, 9 occurred in the first half of 2026.

"What used to be a rare occurrence throughout the year has now become almost a weekly routine emergency brake," lamented a South Korean netizen on a stock forum.

Hence, a modified version of an investment maxim began circulating among South Korean investors, inspired by Buffett: "First rule: Do not buy, absolutely do not touch the South Korean domestic stock market. Second rule: No matter what, adhere to the first rule."

The South Korean domestic stock market has been likened to meme coins and the wild world of crypto, not because stocks have actually turned into cryptocurrencies, but because people suddenly realized that holding stocks was becoming more akin to chasing a highly volatile chip without brakes.

On the Korean forums, they gave KOSPI a nickname – "KSPY" – with a succinct mockery: "KSPY makes SPY look like a child's plaything." SPY is the US stock ETF that tracks the S&P 500 and has always been synonymous with volatility; but compared to Korean stocks, the S&P's fluctuations seem like child's play.

An American netizen shared their experience, mentioning they had also joined the KOSPI rally earlier this year, "but I had to get out; the volatility was too great, the pressure too intense." The replies below were unforgiving: "Your Korean genes are evidently lacking." "You should use leverage to buy, only then can you have the full Korean stock market experience."

For readers of BeatZ who rode the wave, we all witnessed this round of "high-rise and collapse."

Just half a year ago, KOSPI was the best-performing major index globally: finishing 2025 at 4,214 points, reaching a historic peak of 9,385.59 on June 19, 2026, more than doubling at one point. Driving this surge was the AI, storage, and semiconductor narrative led by Samsung and SK Hynix, the same theme we have dissected repeatedly over the past few months. On June 22, SK Hynix's market cap surpassed Samsung's for the first time in 25 years, seen as a symbolic peak of this bull market.

Then, in just a few short weeks, this "Global Top" index tumbled from its peak, hitting a low on July 29th that was 44% below the June high. July is likely to be the most brutal month in KOSPI's recorded history, with a nearly 30% drop, causing a market value evaporation of trillions of Korean won.

A market that combined retail leverage and high concentration of blue-chip stocks plummeted from heaven to hell in a matter of weeks.

Soju, Part-time Jobs, and Crying in the Hallway

If you scroll through South Korean forums and social media these days, you can piece together a very specific portrait of the Korean people.

One Korean netizen posted: "Three days ago, I drank two bottles of soju in one go. After seeing yesterday's and today's stock prices, I no longer even have the desire to drink. I am now frantically submitting resumes on AlbaMon and JobKorea (Korea's two largest part-time job search websites), hoping to find at least three jobs."

This netizen lost an amount of money equivalent to two imported cars in this wave of losses, feeling so stressed that they can't sleep.

Someone replied below: "To be honest, I have also frantically searched for part-time jobs. I have no appetite now and don't want to socialize with anyone."

Other netizens also mentioned that they can't bring up the topic of stocks in public now and need to be cautious even in crowded places.

On X, a post translated from Korean by Grok went viral.

The poster called themselves "Winner of Life," but all they wrote were ㅜㅜ (a Korean symbol indicating crying): "Today is really serious, the company is in emergency mode. After a minister was forced to close his position, he screamed 'life is over' and cried in the company hallway. He has run out of all his loans, saying he has no money left, and even poured all his retirement savings in. He finally said, I also have several accounts in losses, feeling very uncomfortable, but there are people even worse off than me all over the company. This post has over three million views and has been shared all over the internet."

Furthermore, many netizens are also worried about the current social atmosphere in South Korea, which may lead to serious social issues. Many other netizens have also pointed out the extreme side of Korean culture.

However, more concerned than the netizens about the potential occurrence of serious social issues is the South Korean government.

On July 28, on the same day as the market collapse, the South Korean government plans to establish a "National Suicide Response Office," jointly with the Police Agency and the Fire Department, to elevate the past local government-centric suicide emergency response to the national level. They will also maintain contact and visit those suicide attempt survivors who refuse psychological counseling.

South Korean Government Plans to Establish "National Suicide Response Office"

This mechanism itself is a more macro-level crisis intervention, not necessarily only targeting the stock market crash. However, its appearance at this time point has swiftly linked it with the flood of jokes on losses and the public sentiment. When a country's stock market needs to appear in the same week's news as a suicide response office, the joke can no longer continue.

Laying Wreaths at the Entrance to the Seoul National Assembly

The establishment of the "National Suicide Response Office" cannot be said to be an overreaction by the South Korean government. After all, in front of the National Assembly gate on Yoeuido Island in Seoul, there are already more than 30 white wreaths.

Seoul National Assembly Gate Covered with Wreaths

The funeral wreaths with black lettering on a white background are lined up along the sidewalk in front of the parliament, and passing citizens stop to read the words or take photos.

The wreaths are inscribed with statements such as "Investor Protection, Just Lip Service?" and "Delistment Order, Samsung-LG Leveraged ETF Is a Weapon," among others.

The ones sending wreaths are South Korean retail investors.

What they are demanding is the removal and abolition of the "single-stock leveraged ETF" targeting Samsung Electronics and SK Hynix, this type of financial product. South Koreans have given a collective name to these two companies, calling them "Samsung-LG."

The foundation of a regular ETF is diversification, usually covering ten or more stocks. However, a single-stock leveraged ETF targets only one stock, tracking its daily price movement with 2x leverage. If Samsung rises 10% today, the ETF rises 20%; if it falls 10%, the ETF drops 20%.

Even more thrilling is the "negative compounding effect." As long as the underlying stock repeatedly fluctuates, the net asset value of these products will gradually erode. Even if the stock goes nowhere, holders may still lose money.

This high-leverage gambling tool was just listed in South Korea in May of this year. After listing, funds poured in frenziedly. In just one month in July, over 70 trillion Korean won flowed into these single-stock ETFs, such as the "Samsung Richter."

When a sharp decline hits, the mechanical rebalancing of these products (being forced to sell on the way down) magnifies the index's volatility in reverse, creating a self-reinforcing downward spiral. Returns are almost halved, and retail investors are left empty-handed. The assessment of the financial regulatory authorities is that it was this product that added fuel to the market's "abnormal fluctuation," turning the KOSPI into a casino resembling a "squid game."

Why are South Koreans pointing fingers at the government?

Most South Korean stock investors have now realized that it is precisely this high-leverage gambling tool that has led to their financial ruin.

Therefore, two people have been thrust into the spotlight: one is President Lee Jae-myung, and the other is the Chief of Presidential Policy Kim Yong-pan.

It is because they were the driving force behind the rapid listing of these single-stock leveraged products.

To understand why retail investors are directing all their anger toward the government, especially toward Lee Jae-myung, we must first go back to how he reached this point.

Lee Jae-myung's association with the "KOSPI 5000" slogan runs deep. As early as his first presidential campaign in 2022, he shouted "KOSPI 5000," stating, "I don't think reaching 5000 points is difficult. If you believe in me, you should pay more attention to the stock market." That time, he narrowly lost to former President Yun Seok-yeol.

In opposition to former President Yun Seok-yeol's "authoritarian rule," Lee Jae-myung once publicly conducted a 24-day hunger strike.

Known as the "Strongest Hunger King in Korea," Lee Jae-myung live-streamed himself scaling the wall of the National Assembly building during the failed coup led by Yun Seok-yue, initiating a parliamentary vote to repeal martial law.

Lee Jae-myung climbs the wall into the National Assembly with the support of the people

The photo of his climbing the wall later became a symbolic image among Korean youth. Subsequently, Yun Seok-yue was impeached and removed from office, sentenced to life in prison for "attempted insurrection." Lee Jae-myung, on the other hand, rode the wave of the "KOSPI 5000" promise and his popularity among the people to win the election last June. To demonstrate his determination, he even spent 40 million Korean won from his own pocket to buy a domestic ETF before the election, promising to invest another 1 million monthly once elected.

After taking office, Lee Jae-myung quickly fulfilled his promises. The KOSPI indeed reached 5000 points at the beginning of this year, fulfilling the promise that had been doubted by many; it then skyrocketed to 9385. For a while, Lee Jae-myung seemed like a hero who could turn everything he touched into gold: foreign capital poured in crazily, the index was the most dazzling star globally, with an increase of over 100%.

The issue lies in the promise to "reach 5000," but the reality was "surge to 9000 and then drop back to 5000." Both scenarios hit the 5000-point mark, but one felt like heaven upon arrival and hell upon departure. Retail investors went all-in with leverage at the peak, only to be buried halfway up the mountain now.

Lee Jae-myung (center) bows with Samsung Chairman Lee Jae-yong (right) and SK Chairman Choi Tae-won (left)

This "three-person photo" also became a form of dark humor. During the bull market, they represented "KOSPI 5000," the AI chip giants, and the reassessment of Korean assets; after the crash, netizens turned this etiquette photo into an "apology scene of the circuit breaker trio."

Some speak up for the government. No matter how much you may hate the government, the losses caused by leverage are entirely the investors' own greed and fault. "Would anyone smile and thank the government for the asset's leveraged daily surge? This is a typical 'success is my achievement, failure is someone else's fault' mentality."

But the more mainstream sentiment is anger.

Some people have denounced this as "haphazard policy, arbitrarily granting titles, with only ordinary citizens being kept in the dark, which is strangling us." They then ask rhetorically, "The irony is, there are actually people supporting such a despicable and shameless government."

They mockingly refer to the President's name, "이재명" (Yi Jae-myeong), as "대재명" (Dae Jae-myeong), which literally means "Great Jae-myeong," carrying a connotation similar to "the great Comrade Jae-myeong" in Chinese.

What has angered South Korean netizens is the attitude of the South Korean government.

On July 29, while accompanying Lee Jae-myung on a state visit to Brazil, Jin Yong-fan held a press briefing in São Paulo. He did not apologize but instead said, "Not all issues can be attributed to leveraged ETFs."

Jin Yong-fan, Chief of Presidential Policy Office

Jin Yong-fan shifted the blame to "structural factors," stating that the natural volatility of the Korean market is due to vibrant retail investors who are very active in investing, high derivatives exposure, where "a 10-point swing in the core area is magnified to 20 or 30 in Korea."

This explanation has been widely seen domestically in Korea as an attempt to evade responsibility.

For the opposition party, this is an opportunity of immense proportions.

Therefore, the opposition People Power Party immediately demanded Jin Yong-fan's impeachment and called for a national investigation. They even accused the Lee Jae-myung administration of launching this high-risk product disregarding market skepticism just to boost stock prices before the local elections on June 3.

The Lee Jae-myung government has begun urgent damage control. The financial authorities announced that starting from August 5, the basic margin for trading leveraged ETFs will be raised from 10 million KRW to 30 million KRW, and they are also considering restricting new purchases to professional investors, and reducing the leverage ratio by half. The top officials in finance, economics, and the central bank held an emergency "F4 meeting" overnight.

Could this be the beginning of the end for the Lee Jae-myung administration? It's hard to say. After all, the Blue House has its own curse, and South Korean presidents always seem to meet a tragic end.

But it is evident that South Korean citizens are increasingly holding the government, especially Lee Jae-myung himself, accountable for the bursting losses.

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