South Korea's stock market has surged strongly since the beginning of 2026, led by two main companies: Samsung Electronics and SK Hynix, major global memory chip producers who have fully benefited from the global AI wave.
Specifically, demand for High Bandwidth Memory (HBM) chips supplied to the data center industry caused the shares of both companies to rise continuously for months, pushing the KOSPI index to an all-time high.
CNBC reported that Samsung Electronics reached an agreement with its labor union after employees threatened an 18-day strike in May. The company agreed on a profit-based bonus scheme, with some employees in the memory chip business eligible to receive multiple bonuses totaling up to about 626 million won, depending on position and agreement terms.
On SK Hynix's side, Reuters reported that employees could receive bonuses exceeding 700 million won (about 454,851 US dollars) if the company meets its annual profit target of 250 trillion won.
Put simply, this amount is equivalent to several years of income for a typical chip factory worker.
With employees receiving large sums, spending in areas around chip factories, especially Gyeonggi Province—the main location of both Samsung and SK Hynix factories—soared.
Credit card spending growth in Gyeonggi Province outpaced other regions clearly, particularly in luxury goods zones of department stores, including diamond jewelry and high-end watches.
At the end of May, 2x leveraged ETFs directly linked to Samsung and SK Hynix shares were launched. This means if the stock rises 1%, the fund rises 2%, but if the stock falls 1%, the fund loses 2%.
The problem was that South Koreans massively bought these ETFs. CNBC reported that retail investors invested a net 14 trillion won (about 9.4 billion US dollars) into these products, while foreign investors only purchased 2 trillion won.
When the stocks reversed, everything collapsed simultaneously. As Samsung and SK Hynix shares sharply corrected, the 2x leveraged ETFs suffered even heavier losses than the stocks themselves.
CNBC reported that the KODEX SK Hynix Single Stock Leverage ETF, designed to move twice the daily price of SK Hynix stock, has dropped more than 80% from its peak on 23 June, while the Samsung-linked ETF fell nearly 75% from its peak.
These are not just numbers on a board but represent real money of South Korean investors, with damage spreading nationwide.
Reports indicate over 1.2 million investor accounts received margin call warnings, and among them, approximately 320,000 to 360,000 accounts were forced to liquidate by brokers, incurring heavy losses; some still owe debts to brokers after collateral sales.
Reuters stated that South Korea's Finance Minister, Koo Yun-cheol, acknowledged lawmakers' demands and apologized publicly during a parliamentary session on Wednesday, admitting that these single-stock leveraged ETFs were released without sufficiently thorough risk assessment.
Simultaneously, Financial Supervisory Service Chairman Lee Ok-won said the agency is considering restricting access to these products to professional investors only and may reduce leverage multipliers if supported by legislation.
The South Korean stock market case reflects a recurring investment cycle: when assets have a strong story combined with tools that amplify returns, greed often grows faster than risk understanding.
Interestingly, this damage did not stem from poor business performance or the end of AI technology, but from many investors using high-risk "tools" on highly popular assets.
Thus, even a slight market shift accelerated damage far beyond expectations.
Sometimes, the most expensive lesson in the stock market is not choosing the wrong stocks but misjudging one's own "risk." Investors must understand the tools before investing and assess their risk tolerance each time.
Investing in a good theme does not guarantee prices will always rise, as stock prices must eventually face market cycle corrections. The more investors rush in fearing missing out, the more likely they are to bear the greatest risk...
Source: CNBC, Reuters
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