South Korea's Market Crashed 30% — The Real Reason Why
AI Summary
South Korea's KOSPI index surged from 3,000 to over 9,000 points in a year, largely driven by Samsung Electronics and SK Hynix, before crashing 30% in months. The crash was triggered by excessive leverage, which amplified gains but also led to a cascade of margin calls and forced selling. The incident highlights the risks of leverage in investing, particularly in AI stocks.
Stock market crash, KOSPI, South Korea, leverage, investing mistakes, AI stocks — South Korea's KOSPI index tripled from 3,000 to over 9,000 points in a year, driven almost entirely by Samsung Electronics and SK Hynix, the world's largest makers of AI memory chips. Then it crashed 30% in months, triggering circuit breakers six times in 2026 alone.
The cause wasn't AI failing — it was leverage. Borrowed money amplified gains on the way up, then triggered a cascade of margin calls and forced selling on the way down. New leveraged ETFs launched in 2026 made it worse, mechanically forcing more selling as prices fell. Even a hedge fund run by a former OpenAI researcher, built on a correct AI thesis, collapsed from 400% returns into heavy losses because of the same leverage trap.
With Indian margin trading and AI-stock hype both rising, here are the three warning signs every Indian investor needs to watch for before a popular trade turns dangerous.
Yashank Rathi is a B.Com (Hons) student at Hansraj College, Delhi University, with a strong passion for finance, markets, business trends, and the startup ecosystem. With growing hands on experience in research, content creation, and SEO driven digital marketing, he brings a fresh and analytical perspective to business journalism. He is the Co-Founder of mangopeoplenews.com, where he works to make complex financial and business topics simple, engaging, and relevant to everyday readers.
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