Song Mi-kyung pocketed a profit of about Won300mn ($200,000) earlier this year as South Korea’s stock market surged on the AI boom. The 60‑year‑old Seoul resident now faces a paper loss of more than 70 per cent as the Kospi slides. She says the declines are “ballooning day by day” and that she may have to wipe out gains made this year.

Retail investors were drawn into the market by the rally led by Samsung Electronics and SK Hynix, which now account for nearly half the Kospi. Leveraged ETFs tracking the two giants, approved in May, amplified swings. Korea Investment & Securities reported that almost half its Samsung clients and 70 per cent of its SK holders are now in the red, while deposits have fallen to Won107tn ($74bn).

In an emergency meeting, the finance ministry announced limits on leveraged ETFs, citing their role in increasing market volatility. Bank of Korea warned of rising household debt, and lawmaker Ahn Cheol‑soo proposed exempting loss‑making retail investors from transaction taxes, signalling drifting regulation.

A modest rebound was seen when the Kospi rose about 3 per cent, and Samsung Electronics gained more than 6 per cent after posting record Q2 results. Revenue jumped 130 per cent to Won171tn, and operating profit surged 1,800 per cent, demonstrating the company’s AI‑driven semiconductor strength.