KOREANS JUST LOST TRILLIONS

Korea is majorly f***ed right now. This July, the KOSPI fell over 33%. That's not just a bad month, that's worse than 2008. Samsung Electronics and SK Hynix shares suffered a historic plunge in late July 2026, dropping over 13% and 14% respectively in a single day. This sharp market downturn was double digits in a single session. Circuit breakers got triggered this month, four times this month alone. And over 1.2 million people got margin called. But as of today, the KOSPI's up 17%. Best day ever had. SK Hynix is up close to 30%. Samsung is up over 20%. Why? Because Microsoft, Amazon and Meta earnings overnight. Telling everyone that the AI spending story isn't dead. That turned a correction into the worst month ever. People weren't just buying Samsung and SK Hynix. They were buying leveraged products on top of them. Funds that double or triple whatever the stock does on the way up. But on the way down, you don't just fall with the stock. It compounds every single day. Losses are worse than the crash itself. Regulators are starting to take action. Two weeks ago, they banned any new leveraged products from launching. And as of today, they've tripled the minimum deposit required to trade the ones already out there. And here's the part that makes it messier. The government didn't just stumble into this. They approved these leveraged products in the first place. Specifically, Korean money to stop Korean money flowing into similar leveraged ETFs already trading in Hong Kong and the US. It was meant to keep investment Korean won at home. And the Korean won at home. That same strategy is under real scrutiny. Questions remain on how the curbs will actually work in practice. And there are mounting calls for the government to take more accountability, including the president himself, who's pushing hard for investment in the first place. So why would so many people go all in on two stocks? Because property in Korea, especially in Seoul, is one of the least affordable on the planet, relative to income. So for a lot of young Koreans, the normal way to buy a home is unimaginable. So the stock market stops being an investment and starts being the plan. They're not gambling for the thrill of it. It's people trying to gamble their way into a future that they can't save for. So will we see real recovery, or is this just a bounce? JP Morgan says that the leveraged ETF unwind is basically done. From $50 billion at the end of June, down to $17 billion. And they're calling this close to a bottom. Others think don't trust a 17% day. But here's what actually kicked this off. Wasn't leverage. It was China making real progress in the AI chip making race, which is a genuine threat to Korea's position. And leverage, why this reaction was so violent? Without it, it's a correction. With it, it's the KOSPI's worst month in history. Whether the AI chip demand story is actually fine, that's not settled. Some analysts think that the fear was overblown. Others think that the AI bubble is a real worry. My take: the threat is real, but also overshot it. Panic also overshot it. The gap between what actually changed and how far the market moved is where I'll be paying attention. Make sure to follow because this is definitely still