Seoul, the new Black Thursday

Seoul’s financial hub is grappling with one of the most severe crises in its modern history, marked by a spectacular collapse of the benchmark KOSPI index, which has plunged 44% in just forty days since its peak on June 19, 2026.

This lightning-fast market meltdown has wiped out nearly $2 trillion in market capitalization—a colossal sum approaching the total valuation of the global cryptocurrency market—leaving investors stunned as the South Korean market alone suffered a net drop of nearly 35% in July.

At the heart of this financial hemorrhage—which forced regulators to repeatedly trigger emergency circuit breakers to halt trading—lies the massive, high-risk use of leveraged ETFs by highly aggressive retail investors, triggering a spiral of forced liquidations reminiscent of the extreme volatility seen in digital assets. According to data compiled by the media outlet 36Kr, the wave of margin calls and automatic position closures triggered over 2.3 trillion won in liquidations (approximately $1.55 billion) between May and mid-July, illustrating the fragility of a highly leveraged stock market where panic among retail investors dangerously amplifies systemic risk.