In one month, the Korean benchmark index crashed from 9,200 points to 6,800 points. More than 1.2 million leveraged accounts were liquidated, including more than 300,000 accounts that brokers directly wrote down to zero—wiping out even their principal.

On July 13, the KOSPI fell 8.95% in a single day. This was the seventh circuit breaker so far this year. Even a Goldman trader was stunned, asking in a report, “When will the selling stop?”
It’s not that Korean companies are failing. It’s that the bull market was built by leverage—and it was inevitably going to backlash against leverage.
How did the Korean stock market get to this point? The starting point of this leveraged bull run was set alight by the Lee Jae-myung administration.
It revised the Commercial Act to strengthen minority shareholder rights, mandated companies to cancel and repurchase treasury shares, and even forced the introduction of single-stock leveraged ETFs for Samsung Electronics and SK Hynix. From 2,770 points when Lee Jae-myung took office, the KOSPI surged all the way to above 9,200 points.
A country of 52 million people opened more than 100 million stock accounts. Retail investors’ holdings accounted for 92% of the leveraged market.
Everyone trades stocks. Everyone adds leverage.
The climax came from late May to early June—Chinese internet feeds were flooded with a meme about Korea’s “golden age” girl. On June 18, the KOSPI first broke above 9,000 points. On June 22, a poll showed the opposition rate (49.7%) first exceeded the support rate (46.7%).
A new stock-market high and a new public-opinion low appeared in the same month. The leveraged bull market created by policy is now losing the public-opinion foundation that the policy depended on.
Why are retail investors so easily forced to liquidate? There’s one core reason: leverage is too high, and volatility is too large.
In Korea, the financing margin ratio for Samsung Electronics and SK Hynix is 45%. What does that mean? If you have 45 million won in cash, you can buy 100 million won worth of stock—implying leverage of over 2x.
Brokers also require maintaining a collateral ratio between 140% and 150%. Do the math: with a 150% collateral ratio, if the stock falls just 17.5%, it triggers a margin call notice. With 140%, it’s only 23%. But Korea’s daily limit-up/limit-down for stocks is 30%—a stock can drop through the liquidation trigger level in a single day, making liquidation entirely possible.
The time brokers give for topping up is usually only one day. If you can’t raise the funds within a day, the next day at the open you’re force-liquidated.
On Black Monday, July 13, Samsung dropped 10.7% and SK Hynix fell 15.4%. In a single day, hundreds of thousands of accounts collectively broke through the liquidation line.
How does a cascade happen?
Step one: foreign capital runs first. Foreign investors have been net selling Korean stocks for five straight months, with net sales of $32.37 billion in June alone.
Step two: retail investors hard-cover. Retail investors’ available cash fell from 139.69 trillion won at the start of June to 105 trillion won within a month—vaporizing 34 trillion won.
Step three: leveraged products became a “downward acceleration.” The dozen-plus stock leveraged ETFs launched in late May triggered a “daily rebalancing” mechanism during the decline—selling more as prices fall, and selling even more as prices keep falling. Goldman estimates that forced liquidation of leveraged ETFs accounted for 62% of net institutional selling on that day. Since launch, the prices of these ETFs have almost halved.
Step four: forced liquidation triggers a chain reaction. On July 13 alone, the total forced liquidation amount was 344.2 billion won. More than 1.2 million accounts hit the margin-recovery line. Among them, 320k to 360k accounts were liquidated in full, clearing the principal to zero. Among the casualties, 62% are young people aged 20 to 30.
In one month, from the “golden age” to losing everything.
The script of the leveraged bull market in China’s A-shares in 2015 is being replayed in Korea.
The first to blow up will always be the most aggressive, highest-leverage accounts. Once this batch of chips is cleared, the market may bounce briefly. Then the low-leverage accounts caught up above will take the opportunity to flee, triggering the next round of stampede.
This isn’t “it’s done falling.” It’s “the first wave of liquidations is temporarily over.” Goldman’s view is blunt: once retail investors’ willingness to “chase rallies and sell on declines” is fully exhausted, the true bottom of the broader Korean stock composite index may not yet have arrived.
In China’s A-shares, 2015 required three rounds of stampede before it truly hit bottom.
In Korea right now, it may be that even the first round hasn’t finished yet.