South Korea's stock market has delivered brutal losses to ordinary investors in recent months, with bank worker Yongjoon Kim losing 20 million Korean won ($14,000; £10,500) on tech shares in July alone. Kim had earmarked the money to help buy a home ahead of his wedding later this year, but his tech investments fell around 25% during the month. The losses are part of a broader rout that has hit the Kospi, the world's most volatile major stock index, as a global frenzy over artificial intelligence stocks turned into a sharp reversal.
"It's going to sting and I'm going to have to work really hard to make up for this," Kim says. "But for others who have taken more risk, they're going to feel the pain."
Kim says many of his friends are in a worse position, describing some as "desperate" after "going all in" with their savings on tech stocks that have since tumbled in value.
How bad has the Kospi's slide been?
The Kospi, South Korea's tech-heavy benchmark, more than doubled in value from the start of the year to top 9,000 points in mid-June, only to crash to 5,500 within weeks before clawing back to around 6,800 points. Wee Khoon Chong of financial services company BNY describes the June-to-August drop as "one of the sharpest corrections" in the index's history, comparable to the slumps seen during the Covid-19 pandemic and the 1997 Asian financial crisis.
The scale of the downturn has been confirmed elsewhere: according to , the Kospi had already fallen roughly 25% from its record closing high of 9,114.55 points by mid-July, confirming a bear market since late June. The volatility was so extreme that, according to the New York Times, regulators were forced to trigger mandatory trading halts almost every other day throughout July. Separately, Bloomberg reported that the Kospi's volatility topped 60%, nearly double that of Japan's Nikkei 225, with circuit breakers triggered nine times by the end of July. Our own earlier coverage tracked the turmoil as it unfolded, including a sharp Asian tech sell-off in late June, a deepening chip-stock rout in late July, and a sharp rebound in early August when the Kospi jumped almost 17% in a single afternoon session.
A key driver behind the recent sell-off, Wee adds, has been growing investor unease over the enormous sums being poured into AI infrastructure and whether that spending is sustainable — concerns echoed in earlier reporting on chipmaker shares tumbling as investors questioned the durability of AI-related demand.
How have individual investors been affected?
For personal investor Woongsa Kim, opening his trading app has become a painful ritual, a reminder of gains made and then lost. At the start of the year, he put roughly half of a work bonus into shares of chipmaker SK Hynix. The stock quadrupled in value before most of those gains evaporated, leaving his holding — now worth about 300 million won — at roughly half its peak value.
"Thinking about it just brings tears to my eyes," Kim told a national broadcaster.
Investment analyst Tobias Reger says the slump followed months of soaring tech shares that had generated "extreme euphoria," prompting some personal investors to borrow money to invest. The pain has been sharpest among those who used leverage, a borrowing technique that lets investors control more shares than their cash alone would allow — amplifying gains when prices rise, but also amplifying losses. If share prices fall past an agreed threshold, brokers can issue a margin call demanding immediate repayment of the debt. By the end of July, an estimated 1.2 million South Korean personal investor accounts had faced margin calls — equivalent to roughly one in every 30 working-age adults in the country.
Frank Benzimra, head of Asia equity strategy at financial services group Societe Generale, says leveraged trading has become a growing trend among personal investors, also picking up in markets such as Taiwan and the United States, which has raised the risks tied to AI-related stocks.
What has the toll been on other investors?
Chanyong Park, who works in marketing, had seen his US-listed Nvidia shares soar more than 1,000% before he moved most of his profits into SK Hynix stock. That decision has since cost him around $10,000 in losses.
"This was money I'd invested to save before planning to leave my job around October to start my own business. But now I'm seriously wondering whether I'll have enough."
Park intends to hold on to his SK Hynix shares in hopes of a recovery, though the recent volatility has made him wary of investing further.
"It doesn't always feel like movements are driven by rational reasons - sometimes it still feels a lot like gambling," he says.
Another investor, Youngji Park, says he went "all in," putting the bulk of his available cash into Samsung shares that at one point peaked at a combined value of 45 million Korean won. He describes the subsequent decline as "gut-wrenching."
"I feel like a fool for trusting the Korean stock market," he says. "It's a long-term game now. I'll just have to wait it out."
College student Soomin Yi says she pooled money with a friend to buy SK Hynix shares after experiencing "fomo" — fear of missing out. She now regrets not selling when the shares peaked at three million won each in June, instead holding out for speculation that they would climb to five million won.
"We didn't really have anyone around us who is experienced in investing, and we did not study investing seriously before buying the stock," Yi says.
Is the worst of the sell-off over?
There are signs the most severe phase of the rout may be easing. According to Bloomberg, forced liquidations of leveraged positions combined with tighter rules on leveraged products have pushed Korean market volatility to a two-month low. South Korea's finance minister said on 4 August 2026 that the government would take steps to curb stock-market volatility, as a boom in single-stock leveraged exchange-traded funds began to slow, according to . The same report noted that leveraged ETFs' share of daily Kospi trading fell sharply, from 33.4% on 30 July 2026 to 6.6% on 31 July and 5.4% on 1 August, suggesting retail appetite for high-risk bets was cooling.
There are also signs of renewed confidence from larger investors. reported that foreign investors turned net buyers of 7.2 trillion won of South Korean shares in a record one-day rally, a reversal after having been net sellers for most of the year. By 13 August 2026, the Kospi had risen to 6,813 points, up 3.56% from the previous session, according to data tracked by Trading Economics. Even so, the underlying instability has been persistent: the Wall Street Journal found the Kospi swung more than 2% in either direction 73 times so far this year, or roughly every other trading session, according to the Wall Street Journal.
Could this spread to other markets?
The turbulence in Korean shares has stirred concern about spillover into other markets. Benzimra of Societe Generale notes that tech-heavy indexes such as Japan's Nikkei 225 appear to be moving in step with the Kospi's sharp swings. However, he believes most of the world's stock markets, which include a broader mix of companies, are unlikely to see comparably violent moves.
"I don't think we can see the same kind of volatility in large diversified markets such as the [Tokyo Stock Price Index] or the US equity markets," Benzimra says.
Investors who spread their money across different markets say that strategy has softened the blow. Yongjoon Kim, who also holds shares in overseas markets, argues the episode should serve as a lesson for South Korean investors.
"I think this whole episode is a warning to Korean investors, especially young investors, not to put everything in one basket and hope for the best," says Yongjoon Kim.
Kim acknowledges he should have been more cautious in his approach to tech stocks. His fiancée, Gaeon Lee, remains optimistic that the market will eventually recover, despite the couple losing part of the savings they had set aside for a home. She says watching Kim constantly monitor their investments has clearly weighed on him.
"Seeing our home savings take a hit in the stock market was definitely a wake-up call," she says.
What happens next?
South Korea's market is expected to stay highly volatile through the trading week of 3-7 August 2026, according to local financial reporting from Chosun Biz. Investors are also bracing for a wave of quarterly earnings reports in the coming weeks, which market watchers say could reset sentiment across tech-heavy Korean shares, according to Featurespace.
Key Facts
- The Kospi surged past 9,000 points in mid-June before crashing to 5,500 within weeks, later recovering to around 6,800-6,813 points by mid-August 2026.
- An estimated 1.2 million South Korean personal investor accounts faced margin calls by the end of July, roughly one in every 30 working-age adults.
- Leveraged ETFs' share of daily Kospi trading fell from 33.4% on 30 July to 5.4% by 1 August, as regulators moved to curb volatility.
- Foreign investors bought a record 7.2 trillion won of Korean shares in a single-day rally after being net sellers for most of the year.
- The Kospi swung more than 2% in either direction 73 times so far this year, roughly every other trading session.
