Korea’s AI-memory trade is unwinding fast: the KOSPI is down nearly 30% month over month, 300,000+ accounts have been liquidated, and leveraged buying in Samsung Electronics and SK Hynix turned a market top into a margin-call cascade. That Korea shock is being framed as part of a broader AI financing problem in the US, where hyperscalers and chip names are leaning on debt, equity, and ever-larger capex to keep the build-out going. The core risk is that AI spending is becoming an open-ended, financing-dependent overhead cycle just as valuations are being repriced and bond markets are demanding higher yields. The video ends on a defensive playbook: buy good assets over time, avoid bad assets at bad prices, and expect cash to keep losing purchasing power.
The KOSPI is down nearly 30% month over month, with multiple single-session drops of 5%, 8%, and 10% after a June 19 all-time high.
Over 300,000 Korean accounts were liquidated; 320,000-360,000 were forcibly liquidated, and some investors ended up owing brokers money after leveraged positions gapped down.
SK Hynix and Samsung Electronics made up more than half of the KOSPI’s market value as Korea’s AI-memory trade ran hotter.
On June 22, SK Hynix passed Samsung Electronics in market cap for the first time in more than 25 years, 3 days after the index peak, marking the symbolic high point of the frenzy.
SK Hynix fell 15.37% in one day, its largest public-company drop ever, while Samsung fell 10.7% in the same session.
Trading was halted seven times in one year on circuit breakers; three of the 11 circuit-breaker events in the exchange’s history happened in a single month.
Korean margin loan balances hit a record above 38 trillion won, about $26 billion, with 9.1 trillion won tied specifically to Samsung and SK Hynix, up from 2.5 trillion won at the end of last year.
Leveraged ETFs tied to SK Hynix and Samsung amplified the move because they rebalance daily, buying more on rises and selling on drops, which stacked margin on margin.
Goldman Sachs data put more than 1.2 million leveraged retail accounts at margin-call thresholds as of July 13, about 1 in every 30 adults in South Korea.
The Korea Financial Investment Association’s forced-liquidation ratio rose from around 1% in January to 5.1% in June and 10.2% by July 9, with over 420 billion won, about $280 million, forcibly liquidated in the first 10 days of July.
Korea’s 60-day correlation between the KOSPI and the Nasdaq 100 rose to about 0.46 versus a 5-year average of 0.16, making the link roughly 3x tighter than normal and near a 2-year high.
The US AI trade is being pulled into the same leverage dynamic: hyperscalers have issued around $244 billion of debt this year, the investment-grade bond market absorbed $75 billion in weeks, and NVDA borrowed $25 billion from the bond market in June.
META’s yield premium over a comparable Treasury has widened, and the same widening is showing up across other big issuers as bond buyers demand more yield for the flood of corporate paper.
AI capex is being described as non-linear and recurring: each new model generation may require close to 10x more compute, and a company may need a bigger, costlier data center again in as little as 18 months.
One end-game is government underwriting: public-private partnerships, national-security framing, and federal money backstopping AI spending as companies try to become too big and too critical to fail before they fail.
The defensive conclusion is to buy the best companies over time, avoid trying to time cycles, and recognize that cash is the asset that keeps losing purchasing power through printing, deficits, and stimulus.
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