Overview
- Seoul allowed single-stock leveraged ETFs on May 27 and retail investors poured roughly 14 trillion won into those products, concentrating bets on Samsung Electronics and SK Hynix.
- The KOSPI plunged about 40% from its June peak during a brutal July selloff that included a 10.84% one-day drop on July 28 and repeated trading halts.
- Regulators raised cash-deposit requirements starting July 31 and tightened margin rules, which pushed leveraged-ETF assets down from about $50 billion to $17 billion and triggered broad deleveraging.
- Retail investors suffered massive losses estimated at roughly $38.7 billion and faced large forced liquidations (about 1 trillion won in June and 993 billion won in July), prompting a net $4.6 billion move into U.S. equities in July.
- Volatility has eased from its June record highs and margin debt has fallen, but heavy foreign outflows, continued won weakness and lasting retail losses leave stabilization incomplete and the market fragile.