The British economic weekly The Economist recently compared the South Korean stock market to a casino, warning against the craze for leveraged investments among retail investors.

Analyzing recent trends in the South Korean stock market, The Economist evaluated that it has been quite a turbulent journey for South Korean investors.

It pointed out that the KOSPI has shown extreme volatility, nearly tripling since early last year before declining by about 25% since last June.

The artificial intelligence (AI) boom was cited as the core driving force that pushed up the stock market.

It explained that as Samsung Electronics and SK Hynix led the memory semiconductor market essential for AI data centers, funds from domestic and foreign investors rushed in.

The Economist noted, "South Korean semiconductor companies are producing surprisingly strong earnings, and it is understandable why people want to invest."

However, it pointed out that the way of betting on rising stock prices is becoming increasingly aggressive.

Comparing South Korean retail investors to "impulsive gamblers," The Economist reported that approximately 10 billion dollars, or about 14.6 trillion won, has been invested in leveraged ETFs this year alone.

In particular, it singled out "single-stock leveraged ETFs," which track the stock price of a single specific company like Samsung Electronics or SK Hynix by multiple folds, as the most dangerous products.

Unlike general ETFs that diversify investments across multiple stocks, these products have a structure where profits and losses are concentrated on the price movement of a single company.

It pointed out that the popularity of such products goes beyond the risk of losses for individual investors and amplifies volatility across the entire market.

This is because, in order to maintain designated multipliers, leveraged ETF operators must buy more underlying assets when stock prices rise and sell additional ones when they fall, which can further amplify one-sided market movements.

The Economist reported that South Korean financial authorities are also concerned about situations where such speculative trading deepens market overheating.

Criticizing the situation, it noted, "South Korean investors are already deeply hooked on these attractive new financial products," adding that "no matter how much financial authorities regret it now, it will not be easy to drag South Korean investors out of the casino."

Reported by Kim Minjeong | Video Editing by Na Hong-hee | Design by Lee Jung-joo | Produced by SBS Digital News