Could a global financial crisis be coming? It really looks like it!

1/ Storage keeps collapsing, and the Korean stock market keeps triggering halts. Many people treat it like a joke, thinking it’s just that local leverage in South Korea is too high. But if you look back at the history of global financial crises over the past thirty years, you’ll find a pattern: in every major crisis, South Korea is always the first to fall.
2/ In the 2020 pandemic stock plunge, three weeks before the U.S. stock market’s four circuit breakers, Korea’s KOSPI had already dropped 35%.
Two months before the 2008 Lehman bankruptcy, South Korea was already facing a “dollar shortage.”
Before the Nasdaq crash in 2000, Samsung and Hynix cut their earnings outlook, and the Korean semiconductor sector peaked first. During the 1997 Asian Financial Crisis, South Korea was the first core economy to be breached.
3/ This isn’t a coincidence. South Korea’s capital markets are almost completely open. Foreign ownership has consistently been over 30%. Samsung and Hynix are among the world’s best “liquidity targets.” With capital able to flow in and out freely, there are enough buyers to absorb sell orders, so even large-scale selloffs can be quickly matched.
4/ So South Korea has become a global capital “reserve cash pool.” U.S. and European institutions normally earn returns in South Korea. Once local liquidity tightens, margin calls become critical, or debt matures, their first reaction is: sell overseas positions, pull the money back home, and put out the fire.
5/ The priority is very clear: first protect local funding, then abandon peripheral exposures; first sell what’s liquid, then move what’s hard to liquidate. This has little to do with whether the Korean economy is good or whether the stock market has a bubble—it’s purely the instinct of capital self-preservation.
6/ This time, South Korea’s ignition point is a combination of the semiconductor bubble and leverage. On average nationwide, every person has 2 stock trading accounts, and 1 out of every 3 trades is on margin financing. When foreign capital withdraws, the leveraged positions in China—and domestic leverage plays—cascade into liquidations, and the circuit breakers can’t keep stopping. Since the beginning of the year, there have been 35 programmed circuit-breaker triggers and 5 full-market circuit breakers, already breaking the record set in 2008.
7/ But South Korea’s problem isn’t caused by South Korea itself. It’s a warning signal of tighter global liquidity. When global capital starts “bleeding” from overseas, South Korea is the first bleeding point, and then it spreads outward step by step along the capital chain and the industrial chain.
8/ In the history of four crises, the ignition points differ, but the underlying logic is the same: the U.S. and Europe’s home market first shows a liquidity shortfall, capital is pulled out from South Korea; South Korea breaks first, and then the impact spreads to Asia-Pacific, commodities, and emerging markets, finally returning to the U.S. and Europe home market.
9/ Could this one evolve into a global financial crisis? The key variable isn’t South Korea—it’s the United States. In 2020, the U.S. Federal Reserve crushed the crisis by using unlimited quantitative easing and near-zero interest rates. What about this time? If the Fed can still cut rates and pour liquidity, the market may be propped up like in 2020. If the Fed continues to raise rates or keeps delaying a rescue, the real crisis may just be starting.
10/ So my judgment is: South Korea’s circuit breaker is a warning, not a conclusion. Whether a financial crisis will come or not depends on whether the Fed still has ammunition and whether it’s willing to use it. Both of these are uncertain right now.
11/ For ordinary people, the most important thing in times like this isn’t predicting a crisis—it’s controlling your position size. You should never go all-in, and never add leverage. Always keep part of your cash, because real wealth opportunities often appear when everyone is most panicked.
12/ My approach: 60% of the core position in the S&P 500 and Nasdaq-100, held long-term without moving. The remaining 40% is cash or short-term bonds, specifically waiting to add when the indexes fall by 15%, 30%, or 40%. It’s not “catching the bottom”—it’s executing according to plan.
13/ Historical data shows that after every major crisis, the Nasdaq-100 and the S&P 500 have gone on to make new highs. 1987, 2000, 2008, 2020, 2022—without exception. A crisis isn’t the enemy of long-term investors; it’s an opportunity.
14/ So I’m not afraid of a crisis. What I’m afraid of is that when the crisis comes, I don’t have cash to add. What I fear even more is that when the crisis hits, I panic and cut losses, handing the bloodied chips to someone else.
15/ South Korea’s circuit breaker is a warning bell, but it’s not telling you to liquidate everything. It reminds you to check your position, control your leverage, and keep cash. The real winners aren’t the people who predict crises, but those who can hold their chips through the crisis and have ammunition to add.
Stay strong, brothers!