South Korea’s retail investors face reckoning as leveraged bets sour

The Bank of Korea reports that leveraged equity investments by retail traders hit a record 60 trillion won ($39.06 billion) by the end of May. This surge was fueled by the May 27 introduction of single-stock leveraged ETFs tied to chip giants Samsung Electronics and SK Hynix. These products, designed to offer double the daily returns of the underlying stocks, saw such intense demand that the Korea Financial Investment Association’s portal crashed on launch day. Over 350,000 investors have since completed the mandatory training required to trade them.

However, the strategy is backfiring as global tech selloffs trigger wild swings on the KOSPI. While the benchmark index has doubled over the past year, regulators are sounding alarms over the potential for a painful correction. Finance Minister Choi Sang-mok has publicly warned against “excessive herd-like behavior,” and the Bank of Korea cautioned that latecomers, driven by fear of missing out, are particularly vulnerable to amplified losses. Margin-based equity investment in South Korea jumped 72.5% in 2025, a rate of growth that significantly outpaces the United States, China, and Japan.

For many traders, the allure of quick gains has been replaced by mounting anxiety. With Samsung and SK Hynix now dominating the index, intraday swings of 5% to 10% have become a fixture of the market. While the Financial Services Commission continues to monitor leverage levels, there are currently no plans for new restrictions. For now, thousands of investors like Byun are left waiting for a rebound, hoping their leveraged bets do not deepen into a full-scale financial rout.