'I lost $14,000 in a month': Investors hit by Korean stock market's wild swings

## Korean Stock Market's Extreme Volatility Hits Investors Hard, Wiping Out Thousands

**Seoul, South Korea** – The South Korean stock market's dramatic fluctuations have left many investors reeling, with some losing significant portions of their savings. Yongjoon Kim, a bank employee, saw 20 million Korean won ($14,000; £10,500) vanish from his investments last month, money he had earmarked for a new home with his fiancée, Gaeon Lee, ahead of their wedding later this year. His tech investments plummeted by approximately 25% in July.

"It's going to sting and I'm going to have to work really hard to make up for this," Kim stated, adding, "But for others who have taken more risk, they're going to feel the pain." He noted that many of his friends are in a "desperate" situation after committing all their savings to the market.

While tech stocks remain popular, the market's sharp swings mean that these investments don't always yield returns, with prices often reacting to every major news development. This instability is particularly evident in South Korea's tech-heavy Kospi index, widely recognized as the world's most volatile stock index.

A global surge of interest in artificial intelligence has fueled extreme price movements in the country's leading chipmakers. Between June and August, the Kospi experienced "one of the sharpest corrections" in its history, according to Wee Khoon Chong of financial services company BNY, comparable to the downturns during the Covid-19 pandemic and the 1997 Asian financial crisis. The index more than doubled in value from the beginning of the year, surpassing 9,000 points in mid-June, before plummeting to 5,500 within weeks. It has since partially recovered to around 6,800 points. Wee attributed a key reason for the recent sell-off to concerns over the substantial investments being made in AI.

The downturn has significantly impacted numerous individual investors who acquired tech stocks over the past year. Woongsa Kim, for instance, finds his shares trading app a painful reminder of his gains and subsequent losses in the South Korean market. Earlier this year, he invested about half of a work bonus into shares of tech giant SK Hynix. The stock's value quadrupled before most of those gains were erased, leaving his investment, now worth approximately 300 million won, at roughly half its peak value. "Thinking about it just brings tears to my eyes," Kim shared with the BBC.

The sell-off followed months of soaring tech shares, which, according to investment analyst Tobias Reger, "generated the extreme euphoria" that prompted some individual investors to take out loans for investing. This impact has been most acutely felt by those who utilized leverage, a form of borrowing in financial markets. Leverage allows investors to control a larger number of stocks than their own capital would permit, leading to greater profits if shares rise. However, if stocks fall past a predetermined level, it can trigger a margin call, where a broker demands repayment of the debt. By the end of July, an estimated 1.2 million South Korean individual investor accounts had faced margin calls, representing about one in every 30 working-age adults in the country.

Frank Benzimra, head of Asia equity strategy at Societe Generale, noted that leveraged trading is a growing trend among individual investors, also gaining traction in markets like Taiwan and the US, which has heightened the risks associated with AI-related stocks.

Chanyong Park, a marketing professional, invested most of the profits from his US-listed Nvidia shares, which had soared by over 1,000%, into SK Hynix shares. However, this bet soured as their value dropped by approximately $10,000. "This was money I'd invested to save before planning to leave my job around October to start my own business. But now I'm seriously wondering whether I'll have enough," Park expressed. He intends to hold onto his SK Hynix shares, hoping for a rebound, though recent swings have made him hesitant to invest further. "It doesn't always feel like movements are driven by rational reasons - sometimes it still feels a lot like gambling," he remarked.

Another investor, Youngji Park, went "all in," putting the majority of his available cash into Samsung shares that reached a peak value of 45 million Korean won. However, his investment has experienced a "gut-wrenching" slump, he said. He also plans to retain his shares in anticipation of a recovery. "I feel like a fool for trusting the Korean stock market," he admitted. "It's a long-term game now. I'll just have to wait it out."

College student Soomin Yi, who pooled money with a friend to invest in SK Hynix due to "fomo" (fear of missing out), now regrets not selling her shares when they peaked at three million won each in June, instead of succumbing to speculation that they would reach five million won. "We didn't really have anyone around us who is experienced in investing, and we did not study investing seriously before buying the stock," Yi stated.

The significant swings in Korean shares are also raising concerns about other global markets. Tech-heavy indexes such as Japan's Nikkei 225 appear to be moving in sync with the Kospi's wild fluctuations, according to Societe Generale's Benzimra. However, he believes that most of the world's stock markets are unlikely to experience such violent movements due to their more diverse company compositions. "I don't think we can see the same kind of volatility in large diversified markets such as the [Tokyo Stock Price Index] or the US equity markets," Benzimra commented.

Traders who diversified their portfolios reported that it helped mitigate the impact of the stock market downturn. "I think this whole episode is a warning to Korean investors, especially young investors, not to put everything in one basket and hope for the best," said Yongjoon Kim, who also holds shares in overseas markets. He acknowledged that he should have adopted a more cautious approach to investing in tech stocks.

His fiancée, Gaeon Lee, remains optimistic about the market's recovery despite the loss of some of their savings for a new home. However, she expressed concern for Kim, noting that the constant need to monitor their investments has taken a toll on him. "Seeing our home savings take a hit in the stock market was definitely a wake-up call," she concluded.