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2026-07-15 08:30:11
[Leverage Amplifies Risks: The Plunge and Fall of South Korean AI Stocks Impacts Global Markets] (1) South Korean AI concept stocks have recently experienced extreme market conditions, highlighting that leverage has become a dominant force that surpasses fundamentals. For example, SK Hynix's stock plummeted 15% on Monday, forcing the managers of leveraged ETFs linked to it to urgently sell billions of dollars worth of shares, triggering a chain reaction of global AI valuation reassessment and quickly evolving into a market-wide crash. (2) This round of selling caused the South Korean Kospi index to plummet 25% in just three weeks, exposing the mutual reinforcement of margin loans, single-stock leveraged ETFs, and highly concentrated index weights (SK Hynix and Samsung Electronics together account for more than half of the Kospi weight), which significantly amplified the two-way volatility of the market. (3) Since SK Hynix can be traded in the US via ADRs, market sentiment continues to be transmitted between Asia and Wall Street around the clock, and the turmoil caused by South Korean leverage has the risk of spillover to the world. This feedback loop played out again on Wednesday—after SK Hynix ADR surged 27%, its domestic stock price rebounded strongly, driving the Kospi index up by more than 7% in a single day, confirming the characteristics of leverage-driven sharp rises and falls.
