AI Stock Losses Prompt Crackdown On Leveraged ETFs In South Korea

Members of the National Samsung Electronics Union shout slogans outside the company's Giheung Campus in Yongin on July 10, 2024. (Credit: Jung Yeon-je/AFP)

KEY POINTS

• Driven by a massive wave of retail investors leveraging bets on AI chipmakers Samsung and SK Hynix, the KOSPI index recently slid 25% into a technical bear market, triggering more than half of the circuit breakers in the market's history over just six months.
• The extreme price swings are increasingly disconnected from the actual performance of chipmakers whose profits are stable and rising.