Korea’s AI stock rout is becoming a lesson in leveraged excess

SK Hynix recorded a 15% plunge on Monday, triggering around $5 billion in forced selling by leveraged ETF products tracking Korean chipmakers, deepening a 25% slide in the Kospi over three weeks. Single-stock leveraged ETFs on SK Hynix and Samsung Electronics in Seoul now manage over $14 billion in assets, with more than a dozen such products losing about 40% since their May listing. Korean regulators have expressed regret for approving these products and are weighing tighter leverage limits and investor education measures to curb volatility.