Bank worker Yongjoon Kim lost 20 million Korean won ($14,000; £10,500) on the South Korean stock market last month. That money was earmarked for a home purchase ahead of his wedding later this year. Instead, his tech investments shed about 25% of their value in July. "It's going to sting and I'm going to have to work really hard to make up for this," Kim says. "But for others who have taken more risk, they're going to feel the pain." Many of his friends are worse off, now in a "desperate" situation after going "all in" with their savings, he adds.
While plenty of investors are piling into technology stocks, sharp market swings mean the bets don't always pay off, with prices moving on every major headline. Nowhere is that instability more pronounced than in South Korea's tech-heavy Kospi, widely regarded as the world's most volatile stock index. A global frenzy around artificial intelligence has driven wild swings in the value of the country's biggest chipmakers.
The Kospi faced "one of the sharpest corrections" in its history between June and August, comparable to drops seen during Covid-19 and the 1997 Asian financial crisis, says Wee Khoon Chong from BNY. The index more than doubled since the start of the year to rise above 9,000 points in mid-June, before plunging to 5,500 within a few weeks. It has now recovered some ground to about 6,800 points. A key reason for the sell-off: concerns over the huge sums being spent on AI, Chong adds.
The slump has hit many of the country's personal investors who bought tech stocks over the past year. For Woongsa Kim, a glance at his shares trading app is a painful reminder of what he made then lost. At the start of the year, he used about half of a work bonus to buy shares in tech giant SK Hynix. The stock quadrupled in value before most gains were wiped out, leaving his investment - now worth about 300 million won - at roughly half its peak value. "Thinking about it just brings tears to my eyes," Kim told the BBC.
The sell-off came after tech shares had soared for months, "generating the extreme euphoria" that moved some personal investors to take out loans to invest, says investment analyst Tobias Reger. It has been most acutely felt by those using leverage - borrowing in the financial markets. Leveraging lets an investor control more stock than their cash would allow, delivering bigger profits if shares rise. But if stocks fall past an agreed level, it can trigger a margin call - when a broker demands payment of the debt. By the end of July, an estimated 1.2 million South Korean personal investor accounts faced margin calls, equivalent to about one in every 30 working-age adults.
Leveraged trading is a growing trend among personal investors, also picking up in markets like Taiwan and the US, says Frank Benzimra, head of Asia equity strategy at Societe Generale. That has raised risks around AI-related stocks, he adds. After his US-listed Nvidia shares soared by more than 1,000%, Chanyong Park, who works in marketing, put most of the profits into SK Hynix shares. That bet went sour, with their value falling by around $10,000. "This was money I'd invested to save before planning to leave my job around October to start my own business. But now I'm seriously wondering whether I'll have enough." Park plans to hold on, hoping for a rebound, though recent swings make him hesitant to invest more. "It doesn't always feel like movements are driven by rational reasons - sometimes it still feels a lot like gambling," he says.
Another investor, Youngji Park, went "all in," putting most of his available cash into Samsung shares that peaked at 45 million Korean won total. The investment has suffered a "gut-wrenching" slump, he says. He too plans to hold, hoping they rise again. "I feel like a fool for trusting the Korean stock market," he says. "It's a long-term game now. I'll just have to wait it out."
College student Soomin Yi pooled money with a friend to invest in SK Hynix after experiencing "fomo" (fear of missing out). Now she wishes she had sold when shares peaked at three million won each in June, instead of buying into speculation they'd rise to five million won. "We didn't really have anyone around us who is experienced in investing, and we did not study investing seriously before buying the stock," Yi says.
The huge swings in Korean shares are also raising concerns about other markets. Tech-heavy indexes like Japan's Nikkei 225 seem to move in tandem with the Kospi's wild swings, says Societe Generale's Benzimra. But most world markets are unlikely to see such violent moves, as they include a wider mix of companies. "I don't think we can see the same kind of volatility in large diversified markets such as the [Tokyo Stock Price Index] or the US equity markets," Benzimra says.
Traders who diversified their portfolios say it helped cushion the blow. "I think this whole episode is a warning to Korean investors, especially young investors, not to put everything in one basket and hope for the best," says Yongjoon Kim, who also holds overseas shares. He admits he should have been more cautious with tech stocks. His fiancée, Gaeon Lee, is optimistic the market will recover despite losing part of their home savings. But she worries about Kim, noting the constant monitoring has taken a toll. "Seeing our home savings take a hit in the stock market was definitely a wake-up call," she says.