Reuters analyzed on the 21st that the government's plan to revitalize the Korean stock market instead left deep wounds on investors.
At a time when the KOSPI index had already risen considerably, the introduction of regulatory easing and leverage products sparked an 'investment frenzy,' causing roller-coaster-like surges and plunges to repeat, leaving pain and trauma to many investors.
The KOSPI, which peaked on June 19th, plunged 30% in two months. The Lee Jae-myung administration allowed single-stock leverage ETFs to resolve the 'Korea discount,' but individual investors jumped into investments by taking on debt without fully understanding the risks.
The outstanding balance of margin loans reached 30 trillion won at the end of June, marking an all-time high. A 30-something investor who said, "Even if reckless, leverage or margin trading is the only way to climb even slightly on a collapsed ladder," revealed that he made a 66% profit at the market peak.
With the AI boom, Samsung Electronics (005930) and SK Hynix (000660) surged to become trillion-dollar market cap companies, and investment enthusiasm reached its peak. However, in early July, the VKOSPI (Korean Fear Index) soared to an all-time high of 97.99, and the mood rapidly reversed.
Citi estimated that individual investors lost $38.7 billion in leverage ETFs. A top director at the Leuthold Group said, "Korea's history of speculative investment is like the Netflix drama 'Squid Game,'" comparing how ordinary people are drawn into high-risk games under extreme pressure and ultimately lose everything.
The stock price crash also left a deep psychological wound on investors. A psychiatrist in Seoul who treats stock-related stress said, "Last year, the number of patients per day decreased to 7-8, but since June this year, it has surged again, and currently I am treating an average of 11 patients per day."
While some investors turned their attention to the U.S. market, distrust remains in Korea despite political apologies and strengthened regulations. Eugene Investment Securities pointed out, "Before improvements in corporate governance could take root, volatility became excessive, making it difficult for foreign long-term investment."
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Though quiet, I believe that distrust has grown in people's hearts.
▶ Original source: https://news.nate.com/view/20260821n13117
