South Korean traders’ leveraged bets unravel
A Korea Exchange (KRX) employee watches stock market data on computer screens in the Yeouido financial district of Seoul, South Korea, on May 11, 2026.
Chris Jung | Nurfoto | Getty Images
South Korean retail investors who took leveraged bets on the country’s AI champions are facing huge losses after a sharp reversal, exposing the risks of a speculative trading boom fueling one of the world’s hottest stock markets.
The pain has been especially acute for holders of single-stock leveraged exchange-traded funds tied to chip giants Samsung Electronics and SK Hynix, which soared with the AI-powered semiconductor rally and are now falling.
Since the launch of single-stock leveraged ETFs on May 27, Korean retail investors have purchased a net 14 trillion won ($9.4 billion) of them, while foreign investors have purchased about 2 trillion won, according to KB Financial Group.
This isn’t going well for them right now. The KODEX SK Hynix Single Stock Leveraged ETF, a product designed to deliver twice the daily movement in SK Hynix shares, is down nearly 70% from its record high reached in June and is down nearly 50% since its debut, according to LSEG data.
South Korean online trading forums were full of laments, especially after SK Hynix’s record one-day drop last week.
“I want to go back to before I started investing in stocks. Give me my money back,” one investor wrote.
“You are determined to kill me,” said another.
While analysts suggest the long-term outlook for memory chip makers remains intact, the losses underscore how South Korea’s retail investment culture is fueling volatility in the country’s tech heavyweights.
Retail investors bear the brunt
“The vast majority of investors who suffered losses are domestic retail investors,” said Jung In Yun, founder of Fibonacci Asset Management.
Leveraged ETFs have also grown rapidly as a share of Korea-focused funds; The share of assets in the 25 largest leveraged Korea ETFs rose from about 15% at the beginning of 2026 to roughly 30% by June, according to Oxford Economics data.
The economic consulting firm downgraded South Korean stocks to neutral in late June, warning that leveraged positioning had increased significantly and that securities firms may become increasingly reluctant to lend to retail investors.
Buyers aren’t just novice traders chasing online excitement, Jung said. Many are investors in their 40s and 50s who are becoming increasingly comfortable with leverage and concentrated technology bets.
South Korea’s central bank warned in a report Retail investors’ leveraged stock investments have climbed to a record high, driven primarily by margin borrowing and increasingly concentrated semiconductor positions, a report published last month revealed.
While the BoK said the rally 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 encourages investors to chase rallies with borrowed money.
Regulatory attention
Regulators also drew attention to this situation. South Korea on Thursday Announces stricter rules for single-stock leveraged exchange-traded fundsSamsung Electronics and SK are trying to curb speculative retail trading following sharp fluctuations in Hynix. According to the new measures, investors will be required to deposit a minimum of 30 million won in cash to exchange products, compared to the previous minimum of 3 million won.
Peter Kim, head of global investment strategy at KB Financial Group, said the losses show how single-stock leveraged ETFs have become a vehicle for speculative trading rather than long-term investing.
“There are no signs of a large-scale rescue of the market by Korean retail investors, but if the sag and collapse and volatility in ETFs continues, it could lead to a prolonged collapse,” Kim told CNBC via email.
But some market veterans say the unwinding could take even longer.
Thomas J. Hayes, chairman and managing member of Great Hill Capital, said memory chip stocks have become the market’s most crowded trade from both an institutional and retail perspective.
“Semi and memory are the most crowded global trade by institutional and retail positioning. It’s over,” Hayes said. One or more hyperscalers outside of Meta “need to soften their capex commitments in their Q2 earnings guidance. You’ll see it crowding by half and our memory as aggressively as ‘crowding’ in the coming months.”
