South Korean retail investors accuse the government of turning the stock market into a casino, and some investors vow not to buy stocks

Comparative news, according to Bloomberg, South Korea's KOSPI Index plummeted in July, causing a large number of retail investors to be hit hard. Despite the index's record rebound of 18% on Friday, retail investors still recorded a record net sale of KOSPI shares on the same day; the index fell 22% cumulatively in July, the biggest monthly decline since the global financial crisis, and the total market value of the Korean stock market is about 3.9 trillion US dollars.

Influenced by President Lee Jae-myung's push for stock market reforms and the listing of single-stock leveraged ETFs, retail investors in South Korea bought a total of about 78 trillion won ($54.2 billion) of KOSPI shares from May to June. After the market plummeted in July, a large number of investors on social media pointed their finger at the government. An investor in his 30s in Seoul said that he first entered Korean stocks in May and has now decided not to invest in the Korean stock market; another 40-year-old investor used housing as collateral to trade stocks with 50 million won and criticized the government for introducing leveraged ETFs, turning the market into a casino.

During July, KOSPI triggered a total of 4 fuses and suspension of trading, setting a record for a single month. Samsung Electronics and SK Hynix together account for more than 50% of KOSPI's weight. The shares of the two companies fell 21% and 35% respectively in July; however, since the beginning of 2025, Samsung Electronics has risen more than 4 times, and SK Hynix has risen nearly 10 times. Analysts said that this is a typical result of crowded transactions when leverage is superimposed. Deleveraging is difficult to complete within a few days. Technology and semiconductor stocks may still fluctuate drastically in the next few months, but it should not be viewed as a complete collapse of AI investment logic.

The Korean government suspended the listing of newly listed single-stock leveraged ETFs in mid-July and promised to introduce more measures to stabilize the stock market and restrict retail investors from participating in high-risk products. However, the head of the Korea Shareholders' Union said that retail anger and criticism of the government has reached its peak, and many investors believe that the relevant measures have come too late.