South Koreans ‘intoxicated by stocks’ swarmed market frenzy – and lost everything

A Vision That Backfired

It was a vision to give South Korea a stock market that reflected its true economic dynamism, by shedding regulatory taboos and encouraging bolder bets – instead, it created an investor trauma that could take years to shake, as reported by the South China Morning Post. The 30 per cent decline in the Kospi benchmark since its June 19 peak has hurt President Lee Jae Myung's government politically and turned the spotlight on an economic system that drove retail investors into poorly understood leveraged products.

The market's volatility has been extreme. Livemint reported that the Kospi plummeted around 40% over six weeks in June and July, burning hundreds of thousands of investors, before rebounding about 20% from its low. The six-week collapse erased roughly $2.5 trillion in market value. The pain fell hardest on South Korea's individual investors, who account for 60% to 70% of the Kospi's daily trading volume. Known as "ants" for their tendency to swarm into trades, these investors had fed the market with a deep faith in Samsung and SK Hynix, companies that dominate production of two leading types of memory chips used to train and operate AI systems.

The Leveraged ETF Gamble

The market fall was preceded by the introduction in May of South Korea's first single-stock leveraged exchange-traded funds, or ETFs. As Livemint detailed, these ETFs used financial tools such as debt and derivatives to enable ant investors to double their bets on Samsung and SK Hynix. That meant if a stock went up 5% in a day, the leveraged ETF would rise by 10%; if it fell 5%, the ETF would fall 10%. The new products proved enormously popular – leveraged ETFs launched on May 27, and the website crashed due to demand, Livemint reported. Interactive Brokers also began offering direct trading in Korean equities in May, and Roundhill Investments launched a DRAM ETF that became the most successful launch in U.S. history, according to Livemint.

The result was a surge in risk-taking. Livemint reported that margin loan balances rose by $7.9 billion to $27.1 billion in six months, and single-stock leveraged ETFs enabled double bets on individual companies. Investors' anger has been directed at President Lee's administration. A group of individual investors sent mourning wreaths to the National Assembly with messages like "Ants being slaughtered—National Assembly, respond," promising revenge at the ballot box, Livemint noted.

Stories of Loss

Personal stories illustrate the devastating impact. Livemint reported that Yoon Kyung-min, 44, invested half his severance pay and lost $7,200 in a week. Jake Cheong, 30, invested $29,000 into a leveraged ETF, and his position fell 69%. Lee Ka-young, 25, lost all her gains, leaving her holdings worth 5% less than when she started.

The psychological toll extends beyond financial losses. The South China Morning Post noted that demand for psychiatric help is rising, and police in Busan arrested a man in his 20s suspected of attempted murder over the stabbing of a YouTuber he allegedly blamed for his stock losses. Jeon Suk-jae, a YouTuber with 3.7 million subscribers, commented on the investor trauma: "Ultimately many who entered the market may have suffered severe losses and a majority of them could become so traumatised that they lose interest in investing altogether." Jeon has seen the comments on his channel, which hosts videos like the one titled "the entire nation is intoxicated by stocks," flip from euphoria to gloom, broadly tracking the national mood.

Political Fallout and Regulatory Response

The market decline has hit President Lee's government politically. Livemint reported that President Lee's approval rating fell to 43.3%, its lowest since taking office. Opposition party members have called for inquiries, and Kim Yong-beom faces a criminal complaint. The presidential office said the government has been making an all-out effort to manage market volatility, according to Livemint.

Regulators have responded by putting approval of new single-stock leveraged products on hold and tripling the mandatory cash deposit to roughly $21,000. The Kospi 200 volatility index fell to 56.76 from 86.18, indicating some easing of fear, Livemint noted. Jung Eui-jung, 68, who heads the Korea Stockholders' Alliance representing about 14 million individual investors, called for delisting leveraged ETFs and for rescue measures, describing the market as "a gambling table, a casino," Livemint reported.

The broader context includes President Lee's pledge to nearly double the Kospi to 5,000 points by 2030 and accelerated reforms. The Kospi was the world's top-performing market in 2025 with a 76% gain, making South Korea the fifth-largest market. The current turmoil raises questions about how South Korea, a tech powerhouse, can progress to developed market status when it hosts such extreme behaviour by retail investors, as the South China Morning Post framed it.