In South Korea,investors are reeling from heavy losses after rough month for stock markets,especially tech shares. Yongjoon Kim, a bank worker,watched his investments nosedive by 20 million Korean won (about $14,000) in July. It's blow to his dream of buying a house before his wedding. He called it painful. Many friends who took bigger risks are now in serious trouble .
The South Korean stock market, particularly the tech-heavy Kospi index, has been on a wild ride. Prices swung sharply with big news. The index shot up to over 9,000 points in mid-June, then crashed to around 5,500 points within weeks, before clawing back to about 6,800 points. Some say it's like past hits during COVID-19 and the 1997 Asian financial crisis,according to Wee Khoon Chong from BNY.
Worries over big bets on artificial intelligence have fueled the sell-off. Many individual investors had dived into tech stocks, riding a high that sent some soaring . But when the market corrected, the fallout was brutal,especially for those who borrowed to invest. Tobias Reger, an investment analyst,noted the intense market conditions led some to borrow more,triggering margin calls as values fell.
By end of July,around 1.2 million South Korean individual investor accounts faced margin calls, affecting about one in every 30 working-age adults. This leveraging trend is growing, not just in South Korea but also in places like Taiwan and the US, raising stakes for those in AI-related stocks, highlighted by Frank Benzimra from Societe Generale.
For many,losses are harsh reality. Woongsa Kim, who put half a work bonus into SK Hynix shares,saw his value halve. He regrets deeply,saying,"Thinking about it just brings tears to my eyes." Chanyong Park, who profited from Nvidia stocks, shifted gains to SK Hynix,only to see a $10,000 drop. Now unsure about his financial future,he's considering delaying a new business.
Youngji Park called his investment in Samsung shares a "gut-wrenching" experience after suffering big losses. He hopes for a rebound but knows the emotional toll. College student Soomin Yi, who bought SK Hynix under pressure to follow the trend,regrets not selling at the peak and admits to lacking serious investment knowledge.
South Korea's stock market volatility is catching eyes beyond its borders. Analysts say tech-heavy indexes in places like Japan's Nikkei 225 are seeing similar swings. But broader global markets may avoid such wild moves due to more diversity. Benzimra noted that while South Korea's market is prone to sharp swings, markets like Tokyo's and US equities are better protected.
Yongjoon Kim,looking back,urged caution,especially for younger investors. He stressed diversification,saying relying only on tech stocks is risky . His fiancée,Gaeon Lee,stays hopeful about a market bounce-back,even though their house savings took a hit . She worries about Kim,noting the stress of constantly watching their investments.
As South Korea's stock market rides these turbulent waves, lessons from this episode might echo globally,underscoring risks tied to concentrated bets in volatile sectors .
