KOSPI has pulled back nearly 40% from its June peak, and Korean retail investors are paying the price for their late FOMO. In 2025, KOSPI rose about 75%, but this had little to do with most Korean retail investors. This year, Korean retail investors have become the largest buyers in the Korean stock market, pouring funds into Samsung Electronics, SK Hynix, and single-stock leveraged ETFs that were only approved for listing at the end of May. By the time many entered the market, Korean semiconductor stocks had already seen significant gains, with market positions and leverage nearing extreme levels. According to estimates from Goldman Sachs' trading division, as of July 13, over 1.2 million leveraged retail accounts in Korea had triggered margin calls, with approximately 320,000 to 360,000 accounts fully liquidated by brokers. Since then, KOSPI has dropped another 18%, and forced liquidations are still ongoing. The funds retail investors can inject into the market are rapidly decreasing. Deposits in Korean brokerage accounts waiting to buy stocks have fallen from a June peak of about $96.6 billion to $74 billion, a decrease of $22.6 billion or 23.4%. Margin balances have dropped from about $27 billion to $23.2 billion, a 14% reduction. These funds include both voluntary withdrawals and losses from margin calls and forced liquidations. Data from Korea Investment & Securities paints an even clearer picture. Among the 880,000 customers holding Samsung Electronics, nearly half are already at a loss. Of the 408,000 customers holding SK Hynix, about 70% are experiencing unrealized losses. The 16 single-stock leveraged ETFs for Samsung and Hynix listed at the end of May have mostly fallen over 60% from their issuance prices. The current issue in the Korean stock market has evolved from retail investors buying at the top to a cycle of continuous deleveraging. Falling stock prices trigger margin calls, margin calls lead to forced liquidations, leveraged ETFs mechanically reduce positions, and new passive sell orders further depress stock prices, triggering the next round of margin calls and position reductions. While demand for AI and memory chips still exists, the problem in the Korean stock market lies in its position structure. Retail investors concentrated their buying at high levels, and leveraged products amplified exposure. Once the upward trend ends, even the best fundamentals struggle to immediately counteract the passive sell pressure. Korean retail investors have now moved from absorbing foreign sell-offs to being forced into liquidations by brokers. How long this phase will last remains uncertain. @Gate Crypto, US stocks, Hong Kong stocks, Korean stocks, gold, CFD, prediction markets—all in one platform.