South Korea’s mandatory liquidation scale in July reached 344.2 billion won, reflecting a credit-book crisis in the Korean stock market stemming from high-leverage trading. According to data from the Korea Financial Investment Association, as of July 9, the cumulative amount of mandatory liquidation for the month had already reached 344.2 billion won. Of that, mandatory liquidation on July 9 alone totaled 142.2 billion won, surging nearly 5 times from the previous day and setting a new one-month high.

The direct trigger of this wave of “dead-pan” liquidation was panic-driven plunges in the Korean stock market. On July 13, the KOSPI index closed down 8.95%, breaking through the 7,000-point threshold and triggering the 7th circuit breaker this year. Semiconductor heavyweights Samsung Electronics and SK Hynix fell 10.7% and 15.37%, respectively. The rapid drop in share prices caused retail margin accounts’ collateral maintenance ratios to fall below required levels, prompting brokers to carry out large-scale forced liquidations and forming a negative feedback loop of “falling—deleveraging—falling again.”

The deeper reason is the overheated leverage risk accumulated in the market. South Korea had previously rolled out multiple 2x leveraged ETFs tracking semiconductor giants, drawing large numbers of young retail investors to enter at high levels with leverage—some even invested using family loans. As expectations for AI semiconductor earnings were revised downward, the ETFs’ “daily rebalancing” mechanism became a passive sell-off during the decline, amplifying the stampede effect. According to statistics, in June alone, more than 1.2 million accounts across the market had already reached the margin call line, with around 300,000 accounts’ principal wiped out. The 20-to-30 age group accounted for more than 60%.

Because mandatory liquidation data has a two-trading-day lag, the liquidation pressure generated by the nearly 9% plunge on July 13 had not yet been fully released. The liquidation sizes to be announced next will most likely rise further, and the market’s deleveraging pains will continue.