Korean college student’s 5x leveraged stock trading yields up to 15 times, gains wiped out after market correction

Odaily Planet Daily News: Lee Seung-ho, a 24-year-old South Korean college student, used a 5x leverage through a trading app, turning his 20 million won saved during military service into nearly 300 million won at its peak, about 15 times his initial principal. However, after a sharp fluctuation in the South Korean stock market in May this year, his brokerage firm triggered multiple margin calls, and all related gains evaporated within 4 weeks, with his account balance ultimately falling below the initial investment.

Lee stated that high leverage accelerates wealth growth, but continuously betting with full positions could ultimately lead to losses. According to data from the Korea Financial Investment Association, the balance of margin loans in the South Korean stock market reached a record 38.63 trillion won on June 24, and was still as high as 34.37 trillion won as of July 15.

Over the same period, the KOSPI index at one point more than doubled in 6 months but then experienced multiple declines of over 10% within a few weeks. South Korean regulators have announced a suspension on the listing of new leveraged ETFs linked to single stocks, stating they will strengthen risk control during periods of increased market volatility. (Reuters)