Bank worker Yongjoon Kim recently lost 20 million Korean won ($14,000; £10,500) on the South Korean stock market. This capital was specifically earmarked to help him purchase a home, as he is getting married later this year. Instead of securing his future, the value of his tech investments slumped by approximately 25% during the month of July.
“It’s going to sting and I’m going to have to work really hard to make up for this,” Kim says. He acknowledges that while he is hurting, others who have taken more risk are going to feel the pain even more acutely. Many of his friends are currently in a “desperate” situation after “going all in” with their life savings, he notes.
Nowhere is this market instability more pronounced than in South Korea’s tech-heavy Kospi, which is widely regarded as the world’s most volatile stock index. A global frenzy surrounding artificial intelligence has driven wild, unpredictable swings in the value of the nation’s largest chipmakers. These fluctuations have left many personal investors struggling to reconcile their losses.
Wee Khoon Chong from financial services company BNY notes that the Kospi faced “one of the sharpest corrections” in its history between June and August. This decline is comparable to the drops observed during the Covid-19 pandemic and the 1997 Asian financial crisis. The index had more than doubled since the start of the year to rise above 9,000 points in mid-June, before plunging to 5,500 within a few weeks. It has since recovered slightly to approximately 6,800 points.
A key reason for the intense sell-off in recent weeks has been growing concerns over the massive amounts of capital being poured into AI, Chong adds. This slump has significantly impacted the country’s personal investors who aggressively bought tech stocks over the past year. For Woongsa Kim, checking his trading app is a painful reminder of the gains he made and subsequently lost.
At the start of the year, Woongsa Kim used half of his work bonus to buy shares in tech giant SK Hynix. The stock quadrupled in value before most of those gains were wiped out, leaving his investment, now worth about 300 million won, at roughly half its peak value. “Thinking about it just brings tears to my eyes,” he told the.
Investment analyst Tobias Reger explains that the sell-off followed months of soaring tech shares, which generated “extreme euphoria” and moved some personal investors to take out loans to invest. This trend has been most acutely felt by those using leverage—a form of borrowing that allows an investor to control a larger number of stocks than their own cash would permit. While this strategy amplifies profits during a bull market, it can trigger a margin call if prices fall past an agreed level.
By the end of July, an estimated 1.2 million South Korean personal investor accounts had faced margin calls, a figure equivalent to about one in every 30 working-age adults in the country. Frank Benzimra, head of Asia equity strategy at Societe Generale, notes that leveraged trading is a growing trend in markets like Taiwan and the US as well, which has further increased the risks surrounding AI-related stocks.
Chanyong Park, a marketing professional, saw his US-listed Nvidia shares soar by more than 1,000% before moving his profits into SK Hynix. That bet went sour as the value fell by around $10,000. “This was money I’d invested to save before planning to leave my job around October to start my own business. But now I’m seriously wondering whether I’ll have enough,” he says. While he plans to hold his shares in hopes of a rebound, he admits the market feels less like investing and more like gambling.
Another investor, Youngji Park, confirms he went “all in” by putting the majority of his available cash into Samsung shares that peaked at 45 million Korean won. His investment has since suffered a “gut-wrenching” slump, leaving him to navigate the fallout of the market’s recent volatility.
“It doesn’t always feel like movements are driven by rational reasons – sometimes it still feels a lot like gambling,” he says.
While plenty of investors are piling into technology stocks, sharp market swings mean the bets don’t always pay off, with prices often moving on every major headline.
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