📉 Korean retail leverage bubble: 15x returns erased, $38 trillion margin loans face liquidation risk

A Korean college student used 5x leverage to trade stocks; his principal of 20 million won once surged 15x to nearly 300 million won, but after the May market pullback, in just four weeks it all evaporated and he ended up losing money. This isn’t an isolated case—Korean margin loan balances hit a record 38.63 trillion won on June 24, and were still as high as 34.37 trillion won on July 15. Investors’ total debt first surpassed 60 trillion won at the end of May.
After the KOSPI index doubled within six months, it fell by more than 10% several times over the following weeks. Regulators have urgently paused the listing of new single-stock leveraged ETFs, just two months after approval. In volatile markets, leveraged products accelerate downward far more than upward, and the outcome of retail investors going all-in is often forced liquidation.
Young people in Korea view high leverage as the only way to catch up with home prices (the average price of a Seoul apartment is comparable to 14 years of wages), but once $38 trillion worth of margin loans is concentrated into liquidations, it could trigger broader market selloffs. Can tighter regulation stop the leverage spiral?
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