[South Korean Stock Market Experiences 'From Frenzy to Despair,' Retail Leverage Investors Lose Tens of Billions of Dollars] BlockBeats News, August 23, according to Reuters, the Korea Composite Stock Price Index (KOSPI) has fallen 30% from its June 19 peak, as the stock market frenzy driven by AI hype and leveraged funds quickly turned into pessimism. The South Korean government had originally planned to eliminate the 'Korea discount' by introducing more investment tools and improving corporate governance, but the sharp market fluctuations have brought the effectiveness of these policies and investors' risk tolerance under scrutiny. On May 27, South Korean regulators allowed the listing of single-stock leveraged ETFs, requiring investors to complete just one hour of training and deposit at least 10 million won to participate. During the same period, the market capitalization of Samsung Electronics and SK Hynix both reached $1 trillion, driving KOSPI to more than double from its October levels last year and surpass 8,000 points. Retail investors borrowed heavily to chase the AI trend, with KOSPI margin balances increasing by approximately 75% year-to-date, reaching a record 29.8 trillion won on June 24. Since Samsung Electronics and SK Hynix together account for over 53% of KOSPI's total market capitalization, related leveraged products further amplified market volatility. In early July, South Korea's fear index VKOSPI surged to 97.99, the highest level since statistics began in 2009. On July 28, Citigroup estimated that retail investors had incurred losses of $38.7 billion on leveraged ETFs. The market correction has also brought social pressures. A psychiatrist in Seoul reported that the number of stock investment-related patients he treated daily increased from 7-8 last year to an average of 11 since June this year. In Busan, police arrested a man in his 20s suspected of stabbing a YouTuber, allegedly blaming the individual for his stock losses. Currently, South Korean authorities have tightened restrictions on personal investments in leveraged ETFs. Analysts believe that excessive volatility may also impact South Korea's goal of being included in the MSCI Developed Markets Index. [Original Link]