Koreas stock market: +116%. Then a crash [qxBr9ujlSGP]
South Korea's stock market just surged 116%, crashed into a bear market, and rebounded again, all in about a month. Here is the full story. The Kospi index rallied to an all time high on June 22nd, briefly making South Korea the sixth largest stock market in the world. The fuel was artificial intelligence. Samsung Electronics and SK Hynix build the high bandwidth memory chips that power AI data centers, and demand for those chips sent both stocks, and the whole index, soaring. Then the index gave almost all of it back. By July 16th, the Kospi had fallen 25% from its peak, officially entering a bear market. Korea's stock exchange triggered circuit breakers seven separate times to pause trading, compared with zero times in all of 2025. 1️⃣ The real driver of the whiplash was not the chip companies themselves. It was leveraged ETFs, funds that use borrowed money to double the daily moves of Samsung and SK Hynix stock. Retail investors owned roughly 90% of these products, with about $19.7 billion in outstanding bets at the peak. 2️⃣ Regulators stepped in on July 16th and suspended new leveraged product listings, trying to cool the market before the unwind spiraled further. 3️⃣ That intervention appears to be working. The index has now jumped roughly 10% over the last two trading days, and brokers say the leveraged unwind is finally nearing its end. For anyone holding semiconductor or AI focused funds, this is a preview of what concentrated, leverage fueled rallies can do in both directions. Fast gains and fast pain often come from the same source. The takeaway is simple. When a rally is powered by leverage instead of earnings, the crash can be just as fast as the climb. Educational only. Not financial advice. Save this and follow @themarkethesis for more market breakdowns. How to actually read the market. Stocks, setups, investing, no hype. Grab the free 5 min stock guide in BIO