The Direxion Daily MSCI South Korea Bull 3x Shares (KORU) plummeted 5.71% intraday on Tuesday, reflecting severe pressure on leveraged exchange-traded funds tracking South Korean equities.
This sharp decline follows a historic collapse in South Korea's stock market, with the KOSPI index plunging 12.06% in a single day. The crash resulted from a burst of speculative excess that had built up through 2025 and early 2026, driven by AI-driven euphoria and exceptionally high retail leverage. Before the collapse, South Korea's market was dubbed "the world's hottest casino," with margin trading balances hitting record highs and retail holdings in 3x leveraged ETFs rising significantly.
The market microstructure failure, characterized by extreme speculative frenzy, high-leverage trading, and panic selling, turned a normal correction into a historic crash. With about one-third of South Korea's population participating in stock trading and foreign and retail investors heavily concentrated in large-cap tech stocks, liquidity dried up when leveraged positions faced mass liquidations.
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