South Korea’s AI-fueled stock boom is turning into a cautionary tale of what happens when leverage becomes a more powerful market force than the fundamentals.
SK Hynix Inc.’s record 15% plunge Monday compelled managers of leveraged products tied to the country’s chipmakers to sell billions of dollars of stock, transforming what began as a global reassessment of AI valuations into a market rout. The selling helped deepen a 25% slide in the Kospi in just three weeks, exposing how margin loans, single-stock leveraged exchange-traded funds and concentrated index weightings can feed on one another, amplifying swings in both directions.
