More than 360,000 South Korean margin accounts have reportedly been forcibly liquidated during the stock market's leverage-driven reversal, with Citi estimates placing 62% of the affected accounts among investors under the age of 35.

Goldman Sachs separately estimated that more than 1.2 million leveraged retail accounts had triggered margin calls by July 13, with between 320,000 and 360,000 fully liquidated. Those estimates predate this week's two-session crash, when the KOSPI lost more than 15% and brokers accelerated the closure of undercollateralized positions.

South Korea's margin loan balance reached a record 38.63 trillion won on June 24 before declining to 34.37 trillion won by July 15. Broader investor borrowing, including other forms of stock-backed debt, surpassed 60 trillion won at the end of May. The figures underscore the scale of leveraged exposure that had built up as domestic retail investors piled into chip and AI-related names, mirroring patterns seen during the global AI rally even as South Korean households already carry among the highest debt-to-income ratios in the developed world.

The liquidation and age figures remain market estimates rather than a detailed account-level disclosure from South Korea's financial regulators.

KOSPI Rebounds After Deeper Wednesday Drop

The KOSPI rebounded about 3% to roughly 5,831 on Thursday after Samsung Electronics reported record second-quarter profit, but the index remained almost 38% below its June peak of 9,385.59.

Wednesday brought a further decline after the index fell 8% and pushed its July loss toward 35%. The KOSPI dropped as much as 12.6%, triggered another 20-minute circuit breaker and closed 5.98% lower.

That followed Tuesday's 10.84% collapse led by Samsung and SK Hynix, when trading was also halted after the benchmark remained below the market-wide circuit-breaker threshold.

SK Hynix fell as much as 19% on Wednesday before closing down 9.6%, while Samsung dropped as much as 14% before trimming its loss to 5.2%. The two companies account for more than half of the KOSPI's market value, allowing leveraged bets on memory-chip stocks to transmit directly into the wider index. Both firms are central to the global AI hardware supply chain — SK Hynix is a leading supplier of high-bandwidth memory used in AI accelerators, while Samsung is the world's largest memory-chip maker — meaning the selloff also tested broader investor confidence in the semiconductor cycle that has driven the AI rally.

SK Hynix had already suffered a record 15.4% one-day decline earlier in July as investors reduced exposure accumulated during the AI-driven rally.

Seoul Tightens Leveraged ETF Rules

South Korean authorities are introducing additional restrictions on single-stock leveraged exchange-traded funds after acknowledging that concentrated retail positions intensified the market's volatility.

The proposed framework could cap an investor's exposure to those products at 20% of total investment assets. Regulators will also raise trading costs, require simulated trading and prepare emergency powers for stabilizing markets during extreme price moves.

New listings and advertising for single-stock leveraged products have already been suspended. A separate rule raising the minimum cash deposit required to trade them from 10 million won to 30 million won takes effect on July 31. The moves come as South Korea joins other Asia-Pacific regulators — including counterparts in Japan and Taiwan — in grappling with the tension between expanding retail participation and the systemic risks that concentrated, leveraged retail positions can amplify during rapid drawdowns.