Trader Loses 69% on Leveraged SK Hynix Bet as WSJ Highlights Korea’s ‘Fear Ride’ Kospi

WSJ Revisits Fallout From Sharp South Korea Stock Selloff

Korean Market Cast as the ‘World’s Craziest Stock Market’

Paper Details Retail Losses From Single-Stock Leverage

The Wall Street Journal reported that South Korea’s stock market, which had become one of the world’s hottest on the back of the artificial intelligence chip boom, turned into what it called a “fright ride” just months later. The newspaper focused on the market’s steep rise and fall and the frenzy for leveraged bets, quoting investors who said it felt less like investing than gambling.

“I Thought It Would Keep Rising Forever”

In an article published on Aug. 24 under the headline “The World’s Craziest Stock Market Has Turned Into a Fright Ride,” the Journal examined wild swings in South Korean equities and the surge in retail trading.

The Journal said South Korea had been the world’s hottest stock market for most of last year, driven by the AI boom, before it crashed. The Kospi has more than tripled since last year, then fell about 40% over six weeks in June and July, wiping out about $2.5 trillion in market value. It has since rebounded about 20% from its low.

Jung Eui-jung, head of the Korea Stockholders Alliance, a retail investor advocacy group, told the Journal the market was far too volatile. It was not sound investing but gambling, he said, calling it a casino. The Journal said retail investors accounted for 60% to 70% of daily Kospi trading and helped fuel the rally by piling into Samsung Electronics and SK Hynix.

The Journal also highlighted South Korean retail investors who suffered steep losses in the selloff. Yoon Jae-i, a 30-year-old English instructor, lost $19,000 trading stocks. She has since cut back on taxi rides and travel to save money. Skipping meals, she said, at least helps with dieting.

Yoon Kyung-min, a 44-year-old audio engineer, quit his job and invested half of his severance pay in chip stocks, only to lose $7,200 in a week. He said it would be a serious problem if his wife found out and had not told her the exact size of the loss. At the time, he thought the market would keep rising forever.

Another investor had long warned that stock prices had risen too far, only to jump in late. Jake Chung, a 30-year-old accountant in Seoul, had been a conservative investor who usually put small sums into U.S. stock indexes. Even as people around him turned bullish on Korean shares, he had warned that a sharp drop would eventually come.

But after watching the rally continue in June, he bought about $21,000 of SK Hynix shares and sold them less than three weeks later with a 40% gain. He then put about $29,000 into a leveraged product tied to SK Hynix and was caught in the plunge. The investment shrank to about $9,000, leaving him with a 69% loss. His rule had been that when too many people start bragging about stock profits, the market is near a top. But he said he lost to FOMO, or fear of missing out.

“Retail Investors Are Dying”

The Journal said AI chip stocks were the main force behind the surge in South Korean equities. In 2025, the Kospi rose 76%, the strongest performance among major global stock markets. South Korea’s market-capitalization ranking climbed to fifth in the world from 13th a year earlier, overtaking the UK and France. By the middle of this year, Samsung Electronics and SK Hynix accounted for more than half the total value of the South Korean stock market.

The Journal also pointed to single-stock leveraged products, which first appeared in South Korea in May. The products are designed to deliver twice the daily return of individual stocks such as Samsung Electronics or SK Hynix. If a stock rises 5% in a day, the product returns 10%. If it falls 5%, the loss also doubles to 10%. South Korean financial authorities warned at launch that the products were high-risk instruments that could rapidly magnify losses over a short period.

When the products debuted on May 27, investor demand was so strong that related websites suffered access disruptions for several days. In June, the Kospi climbed above 9,000, more than triple its 2025 level. But concerns about the durability of AI demand and competition from Chinese chipmakers then halted the semiconductor rally, and losses on leveraged products mounted quickly.

The Journal also examined controversy over government efforts to prop up the stock market and the launch of single-stock leveraged products. President Lee Jae-myung had campaigned on a pledge to push the Kospi to 5,000 and accelerated capital-market reforms after taking office. In South Korea, rules covering single-stock leveraged products were revised to narrow regulatory gaps with overseas markets, and products tied to Samsung Electronics and SK Hynix were listed starting May 27.

As the market slumped and losses on leveraged products deepened, backlash from retail investors intensified. The Journal said some investors sent funeral wreaths to the National Assembly to protest that “retail investors are dying.”

Still, the Journal said some investors were taking the South Korean market’s high volatility, known as the “Roller-Coaster Kospi,” relatively calmly. Jonathan Pines, head of Asia at US asset manager Federated Hermes, said he is a long-term investor in Korean memory-chip makers and expects strong earnings to continue for the next two years. He added that investors would ultimately be able to recover most of their initial investment.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com