Retail traders who piled into chipmakers during artificial intelligence boom face heavy losses after sharp market correction wipes out gains.
South Korean investors who rode the wave of enthusiasm for artificial intelligence stocks have suffered steep losses in recent weeks, with some seeing tens of thousands of dollars evaporate in a single month as the market underwent one of its sharpest corrections in decades.
South Korean Stock Market Rout Hits Retail Investors:
Bank worker Yongjoon Kim is among those counting the cost. He lost 20 million Korean won-about $14,000-on the South Korean stock market last month. The money was intended to help fund a new home as he prepares to marry later this year. Instead, the value of his technology investments slumped by around 25 percent in July.
“It’s going to sting and I’m going to have to work really hard to make up for this,” Kim told the Media. “But for others who have taken more risk, they’re going to feel the pain.”
Many of his friends, he said, are in a “desperate” situation after investing heavily with their savings.
The losses form part of a broader sell-off that hit the Kospi index, South Korea’s main stock market benchmark. After more than doubling in value since the start of the year and climbing above 9,000 points in mid-June, the index plunged to around 5,500 within weeks. It has since recovered some ground to about 6,800 points. Analysts have described the correction as comparable in severity to drops seen during the Covid-19 pandemic and the 1997 Asian financial crisis.
A global frenzy around artificial intelligence had driven wild swings in the value of South Korea’s biggest chipmakers, particularly Samsung Electronics and SK Hynix, which together account for a large share of the Kospi’s market capitalisation. These companies benefited from soaring demand for memory chips used in AI data centres. Many retail investors-often referred to as “ants” in local markets-poured money into the stocks, frequently using leverage and specialised exchange-traded funds that amplify daily moves.
At the start of the year, Kim used about half of a work bonus to buy shares in SK Hynix. The stock quadrupled in value before most of those gains were wiped out, leaving his investment roughly half the value of its peak.
AI Stock Rout Wipes Out Korean Investors’ Savings:
Concerns over the huge sums being spent on AI infrastructure by technology giants have been a key factor behind the recent sell-off. Questions about the sustainability of the spending boom, combined with the heavy concentration of the Korean market in a handful of AI-linked stocks and the widespread use of borrowed money, amplified the downturn.
Retail investors had been aggressive buyers throughout the rally, even as foreign funds sold. Margin debt rose sharply, and the introduction of single-stock leveraged ETFs tracking Samsung and SK Hynix further intensified both the gains and the subsequent losses. When prices turned, forced selling and margin calls accelerated the decline.
The human impact has been widespread. Online forums and social media have filled with accounts of life savings, wedding funds and apartment deposits being eroded. Some investors report paper losses of 60 percent or more on their portfolios. Brokerages have reported large numbers of clients sitting on losses in the two dominant chip stocks.
South Korea’s stock market has long been closely tied to the fortunes of its semiconductor industry, a cornerstone of the export-driven economy. The AI boom briefly turned the Kospi into one of the world’s best-performing major markets, attracting both domestic and international attention. The rapid reversal has served as a reminder of the risks when retail enthusiasm, leverage and concentrated bets collide with shifting global sentiment.
While the index has stabilised somewhat, many ordinary investors remain under water. For people like Kim, the dream of using market gains to secure a home and a more stable future has been delayed, replaced by the hard work of rebuilding what was lost in a matter of weeks. The episode underscores how the rewards of technological hype are often unevenly shared-and how quickly they can disappear when the narrative shifts.