The rampant use of high leverage across the retail public is the core accelerator of circuit breakers (fatal hidden danger). This is the most critical culprit behind this crash: At the end of May, South Korea approved 16 single-stock 2x leveraged ETFs in batch, all linked to Samsung and SK Hynix, the two chip giants. Retail investors do not need to open margin accounts or undergo risk control on margin requirements; they can buy 2x long products with one click on their phones.

In just over a month, the scale of these leveraged ETFs surged from $3 billion to $9.1 billion. Over 90% of holders are ordinary retail investors, with a weekly turnover rate of up to 200%, equivalent to the entire retail public leveraging to bet on the chip market.
Once the stock price drops slightly, the 2x leveraged products directly trigger a chain of forced liquidations: stock price drops → leveraged positions are forced to sell due to liquidation → stock price drops further → more leveraged accounts are liquidated, forming an irreversible negative downward spiral. Within just one hour, a massive amount of selling pressure floods out, directly crashing the index to the circuit breaker line. Even regulators later publicly regretted approving these leveraged products.