South Korea's stock market triggered 7 circuit breakers in a year: A summer ruined by leverage for young people

原創｜Odaily星球日報（@OdailyChina）

作者｜Wenser（@wenser 2010 ）

On June 16, the meme "South Korean girls cheer for the arrival of the golden age of humanity" went viral on the internet. Three days later, the KOSPI index hit an intraday high of 9385 points, seemingly confirming the golden age prophesied by the post.

However, before "10,000 points" could be reached, an epic crash arrived.

Over the past month, circuit breakers halting all trading were triggered 4 times in the South Korean market, all on the downside; the KOSPI market triggered the sidecar mechanism (halting program trading) 38 times, while the KOSDAQ market triggered it 22 times, far exceeding the total for the entire year during the 2008 financial crisis.

The KOSPI index experienced a maximum drawdown of 32% from its all-time high, with the extreme sell-off triggering a wave of deleveraging.

As of mid-July, cumulative forced liquidations for the month had reached 344.2 billion KRW; across the market, over 1.2 million leveraged retail accounts hit margin calls, of which approximately 320,000 to 360,000 were fully liquidated by brokerages, meaning roughly 1 in 30 South Korean adults (about 3.4%) faced liquidation risk; retail margin deposit balances evaporated by nearly 30 trillion KRW from the end of June to 107.1 trillion KRW, the lowest level since June 2020.

Volatility continues. Behind each circuit breaker lies the tragic story of countless South Korean retail investors forced to sell at a loss, have their leveraged positions liquidated, and lose everything.

Celebrity Seo Dong-joo Trapped on the "259th Floor" with SK Hynix

On July 13, South Korean celebrity Seo Dong-joo revealed on his YouTube channel The Money Trap that he bought SK Hynix at a high price of 2.59 million KRW; with the stock price falling back to 1.84 million KRW, he joked about being a "South Korean ant trapped on the 259th floor."

When asked about his outlook, Seo Dong-joo said: "I think it's better to wait and see. Even though I say that, I'm really anxious inside. Sometimes, watching the falling numbers on my phone screen, I start yelling without realizing it."

In this crash, Seo Dong-joo's predicament is not an isolated case.

Video blogger "Lalael" shared a meme titled "Someone's also on the 280th floor," joking about buying SK Hynix at 2.8 million KRW and being trapped – their account lost 44% (2.294 million KRW) last month and continued to plummet this month. South Korean comedian Miha also revealed losing 100 million KRW from stock trading.

The relentless decline of the Korean stock market has turned the "stock price floor meme" into a viral sensation on Instagram and short-video platforms, becoming a powerful self-deprecating emotional outlet for South Korean youth.

Korean Veteran Lee Seung-ho: Maxed Out Leverage, Losing 300 Million KRW in a Month

A South Korean military veteran named Lee Seung-ho bet his entire net worth, experiencing a journey from heaven to hell in this stock market frenzy.

24-year-old Lee Seung-ho saved 20 million KRW during his military service. Riding the stock market wave, he went all-in, using leverage to buy a single stock. His paper value once soared to 300 million KRW, creating a "15x overnight wealth myth."

"We live in an era where we can't afford property assets, so stock investment became my only hope for turning things around," he confessed. A standard apartment in Seoul costs the equivalent of 14 years of a young person's entire income, excluding living expenses. Excluded from traditional asset-building avenues, South Korean youth see highly leveraged investing as the only way to bridge the wealth gap.

But when the tide turned, the crash of his single position not only wiped out the 280 million KRW in paper profits but also his hard-earned principal. More fatally, Lee Seung-ho had also used credit loans and leveraged products to expand his investment, ultimately pushing himself into the abyss.

A gambler's comeback attempt ended in a more complete zero. Among South Koreans who use credit loans and other leveraged assets to trade stocks, Lee Seung-ho is far from alone.

According to data from the South Korean financial industry, as of the end of June, the combined household loan balance (excluding policy loans) of the five major commercial banks – KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup – stood at 647.58 trillion KRW, an increase of 3.70 trillion KRW from the end of last year. This amount already represents 85.3% of the total annual loan limit, leaving only about 639.5 billion KRW for the rest of the year.

The market for using loans to trade stocks is already overcrowded; the South Korean stock market has entered an era of "super-loaning."

Stabbing Incident: Paid Group Member Attacks Stock Tipster

On July 13, another market decline triggered a market-wide circuit breaker in South Korea.

That day, a man in his 20s in the Busan area stabbed a man in his 40s and fled. As the case developed, the truth was shocking – this was a bloody incident sparked by a KOL's stock tips leading to massive losses for followers.

The victim was a YouTuber running a stock channel (suspected to be WinnersTV), who had previously, in paid livestreams, frantically urged followers to go all-in. "Sell your underwear if you have to, but buy this stock," "Learn to use margin debt flexibly," and even encouraged followers to sell their cars and gold to go all-in on leveraged semiconductor stock products.

Many followers suffered forced liquidations due to the market crash, losing everything. According to the Busan police investigation, the attacker was a subscriber to the channel who, after following the tipster's advice, suffered significant losses, leading to a destroyed life and ultimately the violent act. The blogger was later referred to prosecutors on suspicion of being an "unlicensed investment advisor."

The paid stock-tipping farce ended in bloodshed.

British Investor in His 40s Loses 400 Million KRW in Korean Stock Crash

This seemingly frenzied South Korean stock investment feast also saw participation from foreign investors.

Data from the Korea Exchange shows that from July 20 to 23, foreign investors were net buyers of Korean stocks for 4 consecutive trading days, with cumulative net purchases of 5.574 trillion KRW (approximately $3.8 billion), the first four-day net inflow streak since April. On July 22 alone, foreign investors net purchased 2.6211 trillion KRW (nearly $1.8 billion) on the Korean main board, the highest single-day record in nearly two months.

According to a post shared by an X platform blogger, a British man in his 40s lost about 400 million KRW (approximately $274,000) due to the recent sharp decline in the Korean stock market.

Due to the loss of principal, the man is currently in a state of extreme anxiety. According to him: "I just want to sell all my holdings now and live peacefully."

Unfortunately, all lessons in the stock market come at the cost of real money. And once you sell your holdings, facing a significant market rebound, it's hard for anyone to stay rational; they might even regret their trading decisions more.

Korean Stock Investment "Guru" Sees Portfolio Shrink by 1.5 Billion KRW in 2 Months

Blogger "CEO Kim" shared the story of a real retail investor who fell from grace.

This investor entered the market early. At the peak of last year's bull market, his account soared to 2 billion KRW (about $1.36 million). Those around him called him a "guru," saying he was very talented, and followed his investment moves. For a time, he was riding high. But in just two months, with the market correction, 1.5 billion KRW vanished into thin air.

Interestingly, his psychological trajectory is strikingly similar to every crypto player and seasoned stock trader:

"It's just a correction."

"It's actually a great buying opportunity."

"If I buy more, my average cost basis will be much lower."

"If I just hold on a bit longer, it'll definitely be fine."

As investing legend Warren Buffett said: "Only when the tide goes out do you discover who's been swimming naked."

Many interpret "the tide" here as the overall market, but it more accurately refers to market liquidity. When liquidity is abundant, everyone looks like a stock-picking genius. However, high returns aren't necessarily a sign of investment skill; sometimes, they are merely the result of taking on greater risk.

When the Korean stock market fell into a liquidity crunch due to excessive leverage, imbalanced market structure, a high proportion of retail loans, central bank rate hikes, and brokerages raising market entry barriers, those lacking risk management were inevitably swept into the abyss by the crash.

New Investors Still Flocking In

Despite the frequent crashes and widespread liquidations in the South Korean stock market, it hasn't stopped newcomers from chasing the wave. The stories of the following two young investors are a perfect illustration.

Kim Ha-young, a Seoul office worker in her 30s, invested in stocks for the first time last year after getting her apartment deposit back. "I didn't do any investment research at all. I just chose SK Hynix and Samsung Electronics based on gut feeling." When asked why, she replied without hesitation, "Isn't Samsung the first thing that comes to mind when you think of South Korea? Isn't it an obvious choice?"

Starting last September, Samsung and SK Hynix shares soared. Her original plan was to "take profit as soon as I make 50,000 KRW (about $33)" to free herself from the obsession with stock prices. But watching the stock prices keep rising, she kept adding to her positions and decided in February this year to hold the two stocks long-term. Currently, their market value has more than doubled.

Kim Ha-young admitted: "I know I risk being swept away by rising or falling prices. Now I just want to let go of greed and proceed steadily." In her vision, she might one day afford a down payment for an apartment on her own, or be well-prepared for retirement.

Kim Do-hyun, from an AI startup in Seoul, shares a similar view. As someone "halfway in the semiconductor industry," Kim Do-hyun has always believed in the market value of Korean blue chips. He also entered the stock market influenced by the bull market and optimistic earnings outlook. In his view, "holding cash during this rally feels like a waste of resources."

The Blue House Created the Korean Stock Bull Market

The South Korean stock market is completely boiling over. The data tells the story best: the total number of South Korean stock investors surged from 6 million in 2019 to 14.5 million by the end of 2025; in May 2026, active trading accounts reached 105 million (a net increase of 6.93 million from the end of last year), roughly double the total population of South Korea; the KOSPI index nearly doubled, leading major global stock indices.

And this owes much to South Korean President Lee Jae-myung, who took office last year.

Early in his term, he made high-profile promises to completely change South Korea's image as an "investment cold spot" and eliminate the negative "Korea Discount" impression. (Editor's note from Odaily: Korea Discount refers to the phenomenon where South Korean stocks are undervalued compared to global peers. Specifically, many listed South Korean companies have strong cash flows and earnings, yet their stock prices remain below book value, and valuations are significantly lower than overseas counterparts. This is particularly evident in the comparison of SK Hynix's stock prices in Korea and the US.)

Furthermore, Lee Jae-myung publicly promised to push the KOSPI index to 5,000 points – at that time, the index was only at 2,800 points. This goal was achieved in January this year. Although the KOSPI index has fallen nearly 30% from its all-time high, its year-to-date gain remains as high as 55.5%, far ahead of other major global capital market indices.

After becoming president, to reduce Koreans' reliance on real estate investment, the Lee Jae-myung administration introduced a series of stock market reform measures. These included "allowing minority shareholders to concentrate their votes on their preferred candidates when electing board members," aiming to make the stock market a second reservoir for capital.

Of course, Lee Jae-myung's approach is understandable. As Asia's fourth-largest real estate market, South Korea's real estate sector has become one of the most expensive in the world. Such high housing prices give many young South Koreans even more reason to "use leverage to trade stocks" and "take out loans to invest in stocks." However, the violently fluctuating market has ultimately given them a brutal lesson in investing.

Whether the KOSPI can return to its peak and the bull market melody can continue to play is something no one can predict. But one thing is certain: this frenzy, driven by policy, fueled by leverage, and driven by emotion, is far from unique to South Korea. From Wall Street to Tokyo to Seoul, every generation of young people has bet on the future in their era's "gambling game" and paid for some grand narrative. The story of South Korean youth is merely another vivid replication in the long river of history – they were not the first, and they will certainly not be the last.