[Edaily Reporter Kim Kyeo-Re ] The U.S. daily The Wall Street Journal (WSJ) reported on the 24th (local time) that retail investors have suffered heavy losses amid extreme volatility in the South Korean stock market.

In an article titled “South Korea’s Once-Red-Hot Stock Market Turns Into a Roller Coaster of Fear,” the WSJ reported that the KOSPI index, which had ridden the artificial intelligence (AI) boom, collapsed, causing $2.5 trillion (approximately 3,456 trillion won) in market capitalization to evaporate in just six weeks. Although the KOSPI has rebounded by about 20% from its subsequent low, extreme volatility—rare among major global stock markets—continues.
Last year, the KOSPI rose 76%, recording the highest return among the world’s major stock markets. South Korea’s stock market also climbed from 13th to 5th in global market capitalization rankings over the past year, surpassing the United Kingdom and France. In June of this year, the KOSPI surpassed the 9,000 mark, rising to more than three times its level from last year.
However, the rally—driven primarily by semiconductor stocks—has stalled amid concerns over the sustainability of AI demand and the growing competitiveness of Chinese semiconductor companies. Since retail investors had expanded their investment scale through leveraged products and margin trading, losses resulting from the stock price decline were amplified. Interest was so high when leveraged ETFs were launched last May that websites crashed, and a large number of new retail investors—including full-time homemakers, students, and retirees—entered the market.
The WSJ highlighted the stories of retail investors who suffered losses after jumping into KOSPI investments. The WSJ wrote, “Retail investors are called ‘ants’ because, while they are individually weak, their collective influence is significant.”
An accountant in Seoul, who had earned a 40% return in a short period by investing in SK Hynix stock, invested approximately $29,000 (about 40 million won) in an SK Hynix leveraged ETF. However, his investment subsequently declined by 69%, leaving him with only about $9,000 (about 12.44 million won). He had not been very active in stock investing in the past and had only invested small amounts in U.S. ETFs, but when the KOSPI index surged sharply, he felt he had to ride the market’s upward trend—even if only for the short term. “My rule of thumb has always been that when too many people around me start bragging about their stock profits, it means the market has reached its peak,” he said, adding, “But in the end, I succumbed to FOMO (fear of missing out).”
Lee Ga-young, a software developer, also invested approximately $14,000 (about 19.35 million won)—comprising savings and profits from cryptocurrency investments—in SK Hynix and related leveraged products late last year. Although her return rate briefly exceeded 58% last May, she has since lost all her initial gains following the market downturn, and her current investment portfolio is now 5% below the initial investment amount.
Yoon Kyung-min, who quit his job to work as a sound engineer, invested half of his severance pay in semiconductor stocks and lost $7,200 (about 10 million won) in just one week. “I thought the market would keep rising forever,” he said.
The Wall Street Journal noted that the sharp decline in the KOSPI is also creating political pressure. This is because President Lee Jae-myung, who describes himself as a “retail investor,” has spearheaded capital market reforms aimed at boosting stock prices. President Lee’s approval rating has fallen over the past two months, reaching 43.3%—the lowest level since he took office last June. The opposition party is demanding an investigation into the government and ruling party’s handling of the introduction of single-stock leveraged ETFs and their response to the market.