"Give me my money back."

That was the message flooding Korean trading forums this month, posted by ordinary people who had just watched their savings disappear. Not over years. Over days. Some had put in the equivalent of a house deposit. Many were down 30, 40, even 70 percent, and the worst part was that most of them still do not fully understand what happened to them.

They were not gambling on some obscure penny stock. They bet on the two most famous companies in the country, Samsung and SK Hynix, the chipmakers powering the entire global AI boom. On paper it looked like the safest trade in Korea. So how did it end in one of the ugliest retail wipeouts in years?

The answer is a single, seductive little product that promised something no honest investment ever should. It promised to make your winners twice as big.

To understand the damage, you have to understand the hunger. Through the first half of 2026, the AI trade was the only game that mattered. Chip stocks went vertical. Samsung and SK Hynix, the companies that make the memory chips feeding every AI data center, became national heroes. Their share prices ran so hard that regular Korean investors felt like they were watching a party they had not been invited to.

Then, on May 27, 2026, the invitation arrived. Regulators allowed a brand new kind of fund to launch, called a single-stock leveraged ETF. In plain English, it is a fund built to move twice as much as one single company's stock each day. If SK Hynix rose 3 percent, the fund was designed to rise about 6. For traders who already believed the chip rally would never stop, this was rocket fuel.

The money came in like a flood. Retail investors poured in a net 14 trillion won, roughly 9 billion US dollars, in a matter of weeks. Two names, Samsung and SK Hynix, swelled to more than half the entire value of Korea's main stock index. An entire market was now leaning on the same trade, with borrowed force behind it.

Here is the trap almost nobody warned them about. A single-stock leveraged ETF does not promise double over a month or a year. It only promises double for one single day, and then it resets. That tiny detail is where fortunes go to die.

Imagine a stock that falls 10 percent one day, then rises 10 percent the next. You might think you are roughly back where you started. You are close, but not quite. Now run those same two days through a fund geared to move twice as hard. It drops 20, then gains 20 off a smaller base, and you end up meaningfully poorer than when you began. In a calm market this leak is slow. In a violent, choppy market it becomes a hole in the bottom of the boat. Traders call this volatility decay, and it eats leveraged funds alive precisely when things get scary.

That is the cruel twist. These products are sold as a way to win faster. What they actually do is punish you hardest during exactly the wild swings their owners were betting on. The people who bought them were not stupid. They were simply handed a tool whose real risks were buried in the fine print.

The reckoning came on July 13, 2026. SK Hynix's outlook was quietly downgraded, Middle East tensions rattled global markets, and the AI trade that had felt invincible finally cracked. On that single day Korea's main index, the KOSPI, collapsed 8.95 percent and smashed through a level it had held for months. It was the seventh time this year that trading had to be halted by an emergency circuit breaker, a forced timeout meant to stop panic in its tracks.

For the leveraged crowd there was no timeout. As the chip stocks fell, the funds were mechanically forced to sell, which pushed prices down further, which triggered even more selling. Traders using borrowed money got margin calls, meaning their brokers sold them out automatically to cover the loans. One popular SK Hynix leveraged fund ended up down roughly 70 percent from its June high. Money that took years to save was gone in a fortnight.

By mid July the regulators who had approved these products were scrambling to contain them. On July 16, 2026, Korea banned the launch of any new single-stock leveraged ETFs and roughly tripled the minimum deposit required to trade the existing ones, lifting it to about 30 million won. It was the financial equivalent of putting up a fence after the crowd had already fallen off the cliff.

With 20 years of investment expertise, Caleb Gan is a seasoned professional in stock trading. The hard work and dedication were recognized when his partner and him were featured on Singapore TV Channel 9's MoneyWeek, a prominent financial program. He's also had the privilege to share insights on radio stations like 93.8Live, Capital 95.8FM, and 96.3FM through live interviews about stock market investments. Beyond that, he's also the co-founder of NDU System, where he continues to help others navigate the world of trading.

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Until next time,

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