Taiwan and South Korea retail investors largely maintained their leveraged stock positions during the recent selloff triggered by escalating tensions in Iran, demonstrating a persistent appetite for these tech-driven markets. Bloomberg data reveals Taiwan's margin debt fell only 5% last week to NT$372 billion ($11.7 billion), remaining near record highs not seen since 2007. In Korea, outstanding margin financing surged to a peak of 33.7 trillion won ($23 billion) before a slight retreat, according to the Korea Financial Investment Association. This stability in borrowing suggests investors remain confident in the AI and advanced chip demand that has fueled both markets to record highs prior to the Middle East conflict.

This resilience contrasts with past volatility. A strategist at Lombard Odier Singapore Ltd notes the vivid memory of missing the April 2025 market bottom likely deters aggressive position changes. While a prolonged conflict disrupting energy supplies could prompt reassessment, retail traders might see scope for another so-called TACO trade. Crucially, the margin debt-to-market-cap ratio for both countries remains below 1%, indicating broader risks are contained despite the leveraged bets. Taiwan's 5% weekly drop compares to a steeper 28% unwind during the 2025 tariff turmoil.

Market watchers also point to deeper drivers. In Korea, positions liquidated for margin shortfalls were quickly snapped up by others ready to deploy leverage, creating choppy, gyrating index movements. Fibonacci Asset Management Global's CEO argues the Korean market's long-term underperformance and relatively attractive valuations by global standards continue to draw investors back in, explaining the persistent demand for leveraged exposure even amid volatility.