The carnival comes to an end, the "darkest hour" for South Korean stock market investors

"I was too greedy." The words of investor Cao Shasha are full of regret.

On August 6, 2026, XL Er Nanfang SK Hynix (07709.HK) held by Cao Shasha fell by more than 19.11%. Since July, the loss in her stock account has expanded from 20% to 50% all the way.

"Every stock I bought was profitable at the very beginning," she recalled. But now, looking at the floating loss of nearly RMB 500,000 in her account, she is too sad to shed tears.

In the first half of the year, the South Korean stock market and A-share market staged an extreme bull market for technology stocks. Cao Shasha dived into it and almost caught the starting point of every round of market rise — XL Er Nanfang SK Hynix, which she bought at HK$33 per share, rose to a maximum of HK$193.65 per share; GigaDevice (603986.SH), which she opened a position at 366 yuan per share, hit a maximum of 846.66 yuan per share, and the floating profit of her account once exceeded 100%. She immersed herself in the joy of the surging stock market and dreamed that her positions could earn more.

However, the market shifted far faster than she had imagined. Entering July, the Korea Composite Stock Price Index corrected sharply, falling from the highest point of 9385.59 on June 19 to the lowest point of 5262.77 on July 29, with a pullback of nearly 44% in more than a month. Semiconductor leaders bore the brunt — SK Hynix fell from the highest point of 2.987 million won per share on June 25 to the lowest point of 1.287 million won per share on July 29, with a pullback of nearly 57%; Samsung Electronics fell from the highest point of 374,500 won per share on June 19 to the lowest point of 189,200 won per share on July 29, with a pullback of more than 49%.

The thick profit cushion was broken through in just a few weeks. As of August 4, her floating loss on XL Er Nanfang SK Hynix was 55.57%, the floating loss on Samsung Electronics was 20.81%, and the overall floating loss of her South Korean stock account was 49.66%.

Her experience is not an isolated case. In July, stories of investors getting liquidated in the South Korean stock market flooded social platforms, and a South Korean artist self-reported that he bought SK Hynix at a high price of 2.59 million won per share. As SK Hynix's share price plummeted to 1.84 million won per share, the artist mocked himself as "the South Korean ant trapped on the 259th floor". There was also an engineer who was about to retire, telling his experience of selling his house and adding leverage to buy SK Hynix, and eventually his 2.2 billion won assets were almost wiped out.

South Korea is one of the major global stock markets with the highest participation rate of individual investors and the highest leverage utilization rate. On May 27, the Korea Exchange listed 2x long/short leveraged ETFs (Exchange Traded Funds) for Samsung Electronics and SK Hynix respectively, and there are also 2x leveraged ETFs linked to the South Korean semiconductor industry index and the KOSPI200 broad-based index. In the Hong Kong market, the Hong Kong Stock Exchange has issued 2x long leveraged ETFs linked to the two major memory leaders and 2x short leveraged ETFs for Samsung Electronics. In the US market, there is a 3x long leveraged ETF (KORU) linked to the MSCI Korea Index, whose underlying weights are highly concentrated in Samsung Electronics and SK Hynix.

According to data from Shenwan Hongyuan, since the batch listing of 2x individual stock leveraged ETFs on May 27, leveraged funds once expanded rapidly, and then the shocks of technology stocks caused the overall scale of such products to pull back by 71.6% from the high point, and the leveraged funds that chased highs in the early stage have been largely cleared out. The absolute scale of credit financing balance has fallen back to 27 trillion won (returning to the level at the beginning of 2026), and the effect of absolute deleveraging has been very significant. Some brokerage people believe that when the index pulls back rapidly, the financing accounts of individual investors will touch the margin call line, and if they are unable to make up the margin, they will be forced to liquidate their positions. The selling pressure from forced liquidation will further push down the stock price and trigger more forced liquidations, creating a negative feedback spiral of accelerating decline.

01

Maximum Floating Profit Exceeds 100%

"Take the profit and leave, don't add positions blindly." On August 5, Cao Shasha told reporters with regret.

Looking back on her investment path, at the end of September 2025, Cao Shasha's first real investment in her life was not stocks, but gold. That day, as usual, she was scrolling through social platforms, and she could always see content such as "the gold market is starting" and "accumulated gold is worth allocating". With a try mentality, she bought her first sum of accumulated gold.

Unexpectedly, after the end of the National Day holiday that year, the accumulated gold in her hand really rose. This made Cao Shasha develop a strong interest in investment. After that, she continued to buy gold. Soon, she often saw posts recommending silver investment, so she bought some silver funds. After that, she gradually got in touch with funds and really stepped into the capital market.

Shortly afterwards, Cao Shasha found that many people on social platforms were discussing the South Korean stock market, especially investing in Samsung Electronics and SK Hynix, believing that the South Korean memory industry is in a boom cycle, and the AI (Artificial Intelligence) wave will continue to push up the demand for memory chips. Cao Shasha consulted a lot of relevant materials and found that these two companies do have globally leading competitiveness, so she silently added them to her watchlist.

In February 2026, the conflict between the US, Israel and Iran broke out, the global market fluctuated sharply, the South Korean stock market also saw a significant correction, and SK Hynix's share price plummeted. In her opinion, this is the opportunity to "buy leading companies at a discount".

After the AI memory market entered the accelerated stage in 2026, the market value of the two major enterprises continued to grow by leaps and bounds. By the market high in June, the combined weight of the two once accounted for 58.4% of the total KOSPI. After the decline since late June, the market value of the two major leaders still occupies half of the South Korean stock market.

She bought her first lot of XL Er Nanfang SK Hynix through her Hong Kong stock brokerage account. Its full name is "CSOP SK Hynix Daily Leveraged (2x) Products", which is a leveraged ETF product, and the fund manager is CSOP Asset Management Limited.

Cao Shasha remembered that the net value of this product was around HK$33 at that time, and then it fell all the way to HK$17. By May and June, the AI industry chain concept continued to be hot in the capital market, SK Hynix's share price rose all the way, and Cao Shasha's position changed from floating loss to considerable floating profit.

Seeing SK Hynix's share price rising higher and higher, Cao Shasha made what she later considered the most fatal mistake — chasing the rise and adding positions. After continuous position addition, her average position cost was raised to more than HK$80. In the following months, the net value of XL Er Nanfang SK Hynix rose to a maximum of around HK$193.65, and the return of her Hong Kong stock account once exceeded 100%.

At the end of June, technology stocks drove the market to adjust. Cao Shasha judged that the market would continue in July and August, and the bull market was far from over, so she chose to continue holding.

What she didn't expect was that SK Hynix and Samsung Electronics dragged the South Korean stock index down all the way, and the double-edged sword of leveraged investment showed its cold edge — the profit on her account was eroded little by little, and the original thick floating profit safety cushion became thinner and thinner. By the end of July, her account had turned from red to green, with a floating loss of 50%.

Cao Shasha recalled that during the worst period of the market, she was traveling and had almost no time to watch the market. Every morning when she woke up, she just opened the account, and every day it was all green. She simply closed the app, only hoping that the market could rise back.

What made Cao Shasha sad was that the A-share market in July also saw a sharp correction. She invested more capital in the A-share market. In April and May, she invested about 400,000 yuan in the A-share market, mainly allocating AI industry chain directions such as PCB (Printed Circuit Board), optical fiber, memory, and computing power leasing, and also bought popular technology stocks such as GigaDevice.

However, none of her investments in the two markets were able to take profits home.

On August 4, Cao Shasha decided to reduce most of her positions and only keep some funds to continue holding. On that day, her investment loss in the A-share market was nearly 40%, and her loss on XL Er Nanfang SK Hynix was nearly 50%.

Talking about whether she will continue to invest in the future, she said she has not quit the market, but her mentality is completely different. Looking back on this year's investment experience, her biggest feeling is that she no longer cares about right or wrong, but has more awe for the market.

02

New Entrant, Loss Exceeds 60%

Also trapped in the stock market vortex is Lee Jisoo, who works in Seoul. As of August 3, her stock account has lost more than 60%.

After graduating from Hankuk University of Foreign Studies, she stayed in Seoul to work, and her income is not very high. She seldom goes out for dinners or buys luxury goods. After several years, she finally saved 80 million won. This sum of money was originally the confidence for her future life and the most important sum of savings since she started working.

Since the beginning of this year, the AI wave has swept the world, semiconductors have become the most dazzling protagonist in the capital market, and the rising market of the South Korean stock market is as hot as midsummer. As one of the global leaders in HBM (High Bandwidth Memory), SK Hynix's share price has soared. Many of Lee Jisoo's colleagues and friends are discussing stocks. She, who has never been exposed to stock investment, didn't care at first.

Lee Jisoo recalled that during the lunch break in the office, the most discussed topic was not travel or food, but "how much money I made in the stock market today". Some people bought SK Hynix, and the account return exceeded 30% in just a few months; some people held heavy positions in semiconductor ETFs, and their account assets kept hitting new highs. In her Moments and chat groups, almost someone posted a screenshot of stock market investment profit every day.

In such an atmosphere, she was also tempted, and slowly formed a natural thought — "buy and hold, you can basically make money".

In early June, she used most of her savings to buy SK Hynix at a price of around 2.4 million won per share.

At first, as SK Hynix's share price continued to rise, she was glad that she finally caught up with this AI express. The saying "buy and hold to make money" seemed to be coming true. She expected to get higher returns.

However, starting from the end of June, SK Hynix, which had been rising all the way before, continued to fall.

In just one month of July, Lee Jisoo's stock account kept shrinking — losses of 20%, 30%, 40%... Now the floating loss of the account has exceeded 60%.

"Although there is no financing and no liquidation, watching the account shrink little by little every day is more uncomfortable than losing all at once," she said.

The savings she saved for many years are now less than 30% left. Most of her colleagues and friends are also losing money, and some have lost even more than her.

"Just treat it as paying tuition fees," she comforted herself.

03

House Prices Rise 10% A Year, But SK Hynix Rises 10% In A Single Day

Compared with Lee Jisoo, Kim Tae-hyun is much luckier. After the sharp market decline in July, he has not lost money so far.

If it were not for the AI chip boom, Kim Tae-hyun would not have put half of his savings into the high-risk stock market. Kim Tae-hyun is 35 years old this year, and he is an economics researcher at a well-known university in South Korea. If it were not for the AI boom, he who had plans to buy a house and start a family would not have invested half of his savings in the high-risk stock market.

"In the past, South Korean stocks neither rose much nor fell much," said Kim Tae-hyun, and few people around him bought South Korean stocks. On the one hand, the valuation of South Korean listed companies has long been lower than that of European and American companies; on the other hand, the dividend ratio of South Korean listed companies has long been low. Compared with the real estate market where prices rise by an average of 10% per year, the stock market has little attraction for investors.

But since mid-2025, changes have taken place. South Korean incumbent President Lee Jae-myung shouted "KOSPI stands firm at 5000 points" during the campaign, and even revealed in a live broadcast that he bought 40 million won worth of KOSPI200 and KOSDAQ150 broad-based ETFs, calling on South Koreans to invest in the stock market and share the dividends of AI chips.

At this time, Kim Tae-hyun bought SK Hynix stock for the first time, and the share price at that time was 200,000 won per share (about 950 yuan per share). "At that time, everyone thought SK Hynix's share price had risen very high, because it had long been below 100,000 won per share before." When the share price rose to 300,000 won per share, Kim Tae-hyun sold the stock for the first time. Unexpectedly, after that, SK Hynix's share price soared all the way.

In April and May 2026, Kim Tae-hyun bought SK Hynix three times at 1 million won, 1.2 million won and 1.5 million won per share respectively, witnessing it hit an all-time high of 2.99 million won per share. He thought SK Hynix would continue to rise. Kim Tae-hyun recalled, "At that time, analysts at securities companies were shouting that the share price could rise to 4 million won or 5 million won per share", and no one expected that SK Hynix's share price would fall rapidly after hitting the high point.

In May and June, the news reported SK Hynix and Samsung's share prices every day. Even the 50- and 60-year-old neighbors who run supermarkets and butcher shops near my home, who usually don't understand stocks at all, started to enter the market, Kim Tae-hyun laughed and said, "There is a joke in South Korea: when you walk in the alley and see grandmothers talking about stocks, it means the market has reached its peak."

After the skyrocketing came violent shocks. Since late June, SK Hynix's share price has seen a sharp correction. "It can rise 10% one day, and fall 10% the next day," said Kim Tae-hyun. This is the first time he has experienced such drastic stock market fluctuations. Fortunately, he entered the market early. Now SK Hynix's share price has fallen back to around 1.68 million won per share, and he has not lost money.

Compared with many people around him, Kim Tae-hyun has a conservative attitude towards stock investment. He only invested half of his savings, never bought 2x leverage funds, and did not use financing. When the market sentiment was high, he also stopped his parents from entering the stock market.

He observed that in order to catch up with this market trend, many people did sell their original SK Hynix holdings to buy higher-risk 2x leverage funds. He is very cautious about this, and he also very much agrees with the South Korean government's recent decision to raise the threshold for investors to buy leveraged products.

On July 24, the South Korean Financial Services Commission issued a statement saying that it would advance the originally planned minimum cash deposit requirement for leveraged ETF investors to July 31 to curb the demand for such products that are considered to amplify stock market volatility, which took effect earlier than the original plan of August 5. At that time, when individual investors with accounts at local South Korean