Rollercoaster Swings and Deep Scars: The Trauma Left Behind by Leverage Fever

A foreign media outlet has analyzed that the government's initiative to inject vitality into the South Korean stock market has instead left deep scars on investors.

Reuters analyzed that at a time when the Kospi index had already risen significantly, deregulation and the introduction of leverage products sparked an "investment frenzy," leading to repeated rollercoaster-like surges and plunges that inflicted pain and trauma on many investors.

The Kospi, which peaked on June 19, plummeted by 30% in just two months.

When the government permitted single-stock leveraged ETFs as part of efforts to resolve the "Korea discount," individual investors rushed into investments by taking on debt.

The balance of margin loans reached 30 trillion won at the end of June, setting an all-time high.

As the AI boom propelled Samsung Electronics and SK Hynix into the club of companies with a market capitalization of 1 trillion dollars, investment fervor reached its peak, but the atmosphere reversed sharply in early July as South Korea's fear index soared to a record high.

The stock market crash also left psychological scars on investors.

While some investors turned their eyes to the U.S. market, distrust toward domestic regulations remains pervasive despite tightened rules.

Yuanta Securities pointed out, "Volatility became excessively large before corporate governance improvement achievements could take root, making long-term foreign investment difficult."

Although the South Korean stock market still remains more than twice as high as it was in October of last year, the scars and distrust of investors are not expected to heal easily.

Reported by Jung Da-eun | Video by Kim Min-ji | Graphics by Lee Su-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.