Driven by foreign capital inflows, South Korea's KOSPI index has staged a rapid rebound from a historic crash in July, entering a "technical bull market" in just over ten days. As of the close on August 13, the KOSPI rose 3.56% to 6,813.34 points, up nearly 20% from its low on July 30. Samsung Electronics and SK hynix closed up 4.89% and 5.92%, respectively. On the morning of August 14, Korean stocks extended gains, with the KOSPI briefly surpassing 7,000 points.
Despite the index recovering above 6,800 points, market sentiment remains cautious. Unlike the past, when confidence and exuberance prevailed, the current stock community is filled with self-deprecating remarks. Comments like "If you go in again and get robbed, take an IQ test," or "Struggling at 7,000 points, then falling," and "I'm tired of this volatility," are common. After experiencing extreme volatility, the confidence of retail investors, who previously dominated trading volume, has been severely shaken.
A 90s-born office worker, Ji Jae-yeon (pseudonym), working in the Yeouido financial district, told Times Finance, "I can't focus on work anymore. I'm most afraid of opening my securities account and seeing a sea of blue." After the market crash, the subway is eerily quiet, and even the chatter about stocks in restaurants and cafes has noticeably decreased. "It's no exaggeration to say that before, eight out of ten tables were discussing the stock market." Now, in smoking areas, many young men in suits sit in a daze, smoking, with blank expressions on their faces.
Everyone Was a Short-Term Trading Genius
Looking back at the first half of this year, Korean stocks rallied strongly. The KOSPI index hit a record high of 9,385.59 points intraday on June 19, with its total market capitalization briefly surpassing $5 trillion, overtaking India to become the world's sixth-largest stock market. The narrative was simple and compelling: the AI wave drove a surge in computing demand, with HBM (High Bandwidth Memory) being a core bottleneck. Only three companies globally can mass-produce it, and South Korea has two of them: Samsung Electronics and SK hynix.
The profit-making effect ignited a nationwide stock trading frenzy in South Korea. According to data from the Korea Financial Investment Association, as of June 24, the number of active stock trading accounts at Korean securities companies surged to 108.77 million. With a total population of about 51 million, this equates to an average of two stock accounts per person, turning stocks into a second wallet for many Korean households. The number of minors opening accounts also rose significantly, with some company shareholder meetings even seeing elementary school students. Samsung Electronics alone has over 300,000 shareholders under the age of 20.
However, the situation abruptly changed in July. The KOSPI index plunged 22.19% in a single month, entering a "technical bear market." Samsung Electronics and SK hynix fell 21.41% and 35.17%, respectively, in July. Jae-yeon recalled to Times Finance that not long ago, stories of "stock gods" were everywhere, and on social media, everyone seemed like a genius at short-term trading. In group chats, almost daily, people would post records of their stock investment profits. He has a friend facing a margin call risk and can't bear to contact him. Many colleagues in the company have lost money, and friends who used to boast daily in the group are now silent. "I feel a lot of people have lost money. Although Korean stocks have been rising for a long time, retail investors tend to chase highs, and those who aggressively use leverage have been wiped out, especially many newbies who entered this bull market late." He further pointed out that the social FOMO (Fear Of Missing Out) atmosphere had already formed, where not buying stocks was considered a disgrace, labeled as "penny-poor." He has seen elderly people in banks withdrawing their savings to invest in stocks.
Investor Deposits Fall Below 100 Trillion Won
The once-raging stock trading frenzy is gradually cooling down. Trapped retail investors can only slowly digest the losses from this roller-coaster market amidst volatile conditions. According to data released by the Korea Financial Investment Association on August 13, total investor deposits fell to 97.92 trillion won as of August 11, hitting a six-month low. This represents a decrease of about 3 trillion won from the previous day and a nearly 30% drop from the peak in June, reflecting lowered market expectations.
Investor deposits refer to funds held in securities accounts for trading stocks or other financial products. Since these funds may be used to buy stocks in the future, the deposit level is often considered a key indicator of the stock market's potential purchasing power. Higher deposit levels indicate a large amount of capital waiting to flow into the market. Market analysts point out that retail investors were the main driving force behind the KOSPI breaking through the 9,000-point mark in the first half of the year, so the recovery of retail investor sentiment will be a key factor in the future rebound of Korean stocks.
"I've been suffering from insomnia lately. My principal is already lost. Last month, SK hynix hit a low near 1.2 million won per share. My cost was 1.5 million won per share, and I've already cut my losses. Even if it hits a new high, it's useless. The volatility is greater than Bitcoin (BTC), and very few people can truly hold on." Sammy (pseudonym), a doctoral student, told Times Finance. He earns 2.3 million won per month working at the school, but with high living costs and a fast-paced lifestyle, his basic monthly expenses, including rent, utilities, food, and transportation, range from 600,000 to 1 million won. As of the close on August 13, SK hynix rebounded to 1.593 million won per share, a 46.67% retreat from its interim high of 2.987 million won set on June 25.
Market Debate: Rebound or Reversal?
The summer 2026 stock market crash was caused by multiple factors, including the heavy weighting of Samsung Electronics and SK hynix, sustained foreign capital outflows, and central bank rate hikes. Leveraged funds were widely blamed as the primary culprit: a mechanical stampede under leveraged ETFs created a "decline, liquidation" death spiral. Many retail investors, caught up in the feverish bull market, aggressively increased leverage, only to lose everything—and even incur heavy debts—after the crash and circuit breakers.
According to official South Korean statistics, as of July 13, the cumulative forced liquidation scale in July reached 344.2 billion won (approximately 1.57 billion yuan). Over 1.2 million leveraged retail accounts hit margin call thresholds, with about 320,000 to 360,000 accounts fully liquidated by securities firms, leading to a complete loss of principal and even negative balances owed to the brokers.
In Sammy's view, it is extremely difficult for young people to buy a house in South Korea. Even a new local home costs 300 million to 500 million won, forcing most to rent small apartments long-term, making stock leverage a desperate gamble. "It's not just young people trading stocks; the elderly and children also participate. I often hear elderly aunties on the street discussing Samsung Electronics and SK hynix. I know many friends who made money from stock investments, but many also lost. A neighbor lost his retirement fund, and the family has been fighting constantly."
Under the dual pressures of deleveraging and retail investor exodus, the market is hotly debating whether the KOSPI's entry into a "technical bull market" is a rebound or a reversal. The Head of Technical Strategy at Fundstrat Global Advisors stated that with the strong comeback of South Korea's heavyweight memory chip manufacturers, the rebound in Korean stocks has further room to run. Driven by gains in Samsung Electronics and SK hynix, the iShares MSCI Korea ETF has broken through key technical levels, improving the short-term outlook for the Korean stock market. According to Hana Securities, the KOSPI index needs more momentum to break through its previous highs. The stock prices before the correction already reflected many expectations. To surpass the previous highs, there must be positive news beyond existing catalysts or further upward revisions to earnings forecasts.
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