In South Korea's stock market, valued at $4.6 trillion, fervent sentiment is currently spreading like wildfire. Over the past year, the Korean market has led the world with a staggering 200% surge, leaving other markets in the dust. Motivated by this wealth effect, South Korean citizens are entering the market on an unprecedented scale, attempting to amplify their investments through leverage. Currently, trading volume in the Korean market has surged to historical peaks, with daily swings exceeding 5% becoming the norm—this has propelled the benchmark Kospi index to become the most volatile major global stock index. This intense fear of missing out (FOMO) has permeated every corner of South Korean society, from white-collar offices to street-side bars. Consequently, investors are increasingly purchasing stocks for their children: data compiled by Toss Securities shows that new account openings for individuals under 18 in South Korea surged nearly tenfold year-over-year in the first quarter. There are no age restrictions for stock trading in South Korea; minors can open securities accounts and invest in stocks with parental or legal guardian consent. In recent years, a clear trend of "youthification" has emerged in the Korean stock market: many South Korean parents are popularizing gifting popular stocks, such as Samsung Electronics, to their children as a form of early financial education. At shareholder meetings of large listed companies like Samsung Electronics, it's common to see elementary school students and even preschool-aged shareholders. "The atmosphere in the retail investor circle is extremely hot, almost reaching a fever pitch," said 37-year-old Seoul-based financial blogger Jang Eunjung. As the market soared, her YouTube program on stock investing grew from a handful of viewers to over 1.3 million subscribers. "Will we ever see such a vertical rise again?"
The core driver of this trading frenzy stems from the critical role of South Korean chip giants in the AI wave. It has transformed this long-dormant "peripheral market" into the most representative bellwether for observing the extremes of global AI mania. "People caught in FOMO, seeing others make huge profits, often rush into the market recklessly, usually with very high leverage. However, no one knows at which second the bull market might abruptly end," said Kim, who runs an ENT clinic in Seoul and began posting his investment returns on social platforms a year ago. "The danger is that people often increase their investments at the final stage, only to suffer losses. I've had such an experience myself—during the 2018 Bitcoin craze, I added positions at the peak and ultimately incurred losses," he added.
South Korea's current bull run is rare in both domestic and international history. In this leverage-driven frenzy, the South Korean stock market has leaped to become the world's seventh-largest market; heavyweight Samsung Electronics' market capitalization has surpassed the $1 trillion mark, becoming Asia's second-largest tech company by market value. The rise of the South Korean stock market is part of the global AI boom. Previously, South Korea was largely absent from the early stages of the stock market rally because its chip manufacturers were more closely tied to traditional segments of the industry. However, this changed when AI-driven demand entered a period of rapid growth, leading to supply chain tightness. South Korean President Lee Jae-myung's comprehensive financial reforms to stimulate the stock market have also added fuel to this rally. The return of South Korea's 14 million day traders has further fueled this momentum. For much of 2025, they mostly stayed on the sidelines, but have since been drawn by what many see as a "once-in-a-lifetime" market, now flocking back. Year-to-date, South Korean retail investors, often called "ants," have poured approximately 37.7 trillion won ($25.3 billion) into the local stock market, while foreign investors' net selling during the same period was nearly double that amount.
"People increasingly believe that social mobility can no longer be achieved through traditional channels—only through speculative assets. After witnessing people getting rich overnight in the cryptocurrency space, investors are now flocking to stocks like SK Hynix, seeing them as a better option for rapidly accumulating wealth," said Seoul National University economics professor Jaewon Choi.
Risks are also accumulating under unprecedented fervor. Perhaps South Koreans' obsession with the stock market is most evident on social media, which is flooded with trading tips and investment returns posted by influencers and retail investors, fueling the growing "FOMO" psychology. Competition is no longer just about beating the market—it extends among friends, colleagues, and even anonymous online trolls. According to data from the Korea Financial Investment Association, as of mid-May, margin balances in the South Korean stock market reached a record 36.3 trillion won, up 32% from the end of December last year. But this only partially reflects reality, as many loans used to purchase stocks are often categorized elsewhere, and credit provided by small financial institutions may not be captured in official data.
However, the unusual leverage raises concerns about how long this rally can last and, more importantly, how quickly it might reverse. Although bulls point to record profits from companies like Samsung Electronics and SK Hynix to justify the surge, the South Korean market showed risks of a sudden reversal earlier this week. On Tuesday, the Kospi index erased about $300 billion in market value in less than two hours. Market concerns about the rally overheating coincided with a senior government official posting a lengthy article on Facebook proposing the use of excess taxes generated from AI profits to distribute "citizen dividends." Before the market close that day, South Korean stocks recovered more than half of their losses after the government clarified that the post represented a personal opinion, not policy.
Notably, although the South Korean stock market continues to climb to new highs driven by local fund inflows and the AI boom, foreign investors are further withdrawing from the market. According to industry-compiled data, foreign investors have been net sellers of $11.5 billion worth of South Korean stocks so far in May. This puts them on track for the third-largest monthly withdrawal on record, following the unprecedented selling in February and March. "Foreign capital can be quite fickle, especially fast money like hedge funds, but South Korean domestic investors can now be a more stable anchor," Union Bancaire Privée Managing Director Vey-Sern Ling told media. He added that the strong performance of memory chip makers Samsung Electronics and SK Hynix has been a key factor attracting local investors.
So far this year, overseas funds have withdrawn nearly $48 billion from the South Korean stock market, on track for an annual withdrawal record. This outflow is more than double the amount they sold in Indian stocks, a market far less directly linked to AI trades than South Korea. As foreign capital exits the South Korean market, investors are debating whether the memory chip industry has truly entered a "super cycle" or will revert to its typical boom-and-bust pattern. Valuation is not a major concern at present, with the Kospi index's forward price-to-earnings ratio around 8.5 times, compared to about 21 times for the S&P 500.
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