KOSPI Plunges 40% From June High, Retail Investors Face Unprecedented Losses

South Korean market crash triggers massive retail deleveraging. KOSPI drops nearly 40% from peak; margin balances fall to 33.2 trillion won as leveraged ETFs plunge over 60%.

Woofun AI reports that the South Korean stock market reversed sharply after an AI-driven rally, inflicting severe losses on tens of millions of retail investors. The KOSPI index has declined nearly 40% from its June high, potentially marking the largest monthly drop on record. Following intense selling pressure on Samsung Electronics and SK Hynix, the index fell approximately 16% in two trading days, hitting its lowest level since early April. Despite the recent downturn, Samsung Electronics and SK Hynix remain up about 70% and 112% year-to-date, respectively.

Data indicates that nearly half of the 880,000 customers holding Samsung Electronics shares are currently at a loss, while almost 70% of the 408,000 SK Hynix investors are in the red. Active individual trading accounts have reached close to 110 million. Brokerage investable funds dropped from a peak of 139.7 trillion Korean won in June to 107 trillion won, and margin balances fell from a record 38.6 trillion won to 33.2 trillion won, triggering forced liquidations. Sixteen single-stock leveraged ETFs approved in late May have plunged over 60% since listing. The Ministry of Finance announced restrictions on leveraged ETF participation to curb volatility, though analysts warn that extreme fluctuations may deter institutional investment and slow market recovery.