The Indicator from Planet Money · Tuesday, August 11, 2026
South Korea's stock market experienced a significant downturn, with a 40% drop at one point, largely due to margin traders being forced to sell investments as leverage bets unwound. This occurred despite strong fundamentals and booming demand for semiconductor chips from companies like SK Hynix and Samsung.
“Earlier this year, South Korea legalized single stock leveraged ETFs. These look just like a normal ETF on the outside, except there's extra leverage, futures and various other financial tricks on the inside to multiply your returns. What could possibly go wrong?”
“The value of its stock market plummeted 40% at one point. The company still estimate booming demand for their chips. But investors got a little less excited. The leverage bets started to unwind and margin traders had to sell their investments.”
“You look at the fundamentals of these companies, they're they're fabulous. But so it's just a matter of, you're in over your skis and when you use leverage, you can lose all your capital.”