South Korea’s stock market turmoil may be easing after historic selloff

South Korea’s stock market just lived through its worst stretch in decades. And there are early signs the bleeding might finally be slowing down. The KOSPI index cratered approximately 40% from its June peak near 9,385 points during a brutal July selloff driven by the rapid unwinding of leveraged retail positions in AI-related chip stocks. The carnage peaked on July 28 with a single-day drop of 10.84%, the largest one-day decline the index had seen in months, erasing more than $2 trillion in market value and triggering multiple circuit-breaker halts. What happened, and why it got so ugly South Korean retail investors had piled into single-stock leveraged ETFs tied to semiconductor companies riding the AI wave, products introduced in May that attracted individual investors eager for quick gains amid rising housing costs and limited investment alternatives. When sentiment turned, those leveraged positions amplified losses on the way down just as effectively as they had amplified gains on the way up. The unwinding was violent. Margin calls cascaded through the market, forcing sellers who had no intention of selling to dump positions at any price. Retail investors bore the brunt of the...