Hidden leverage risks are escalating in the global AI bull market: US margin debt hit a record high of $1.4 trillion, and leveraged ETF assets doubled to $220 billion in two months; South Korea's KOSPI triggered circuit breakers amid high leverage and concentrated holdings. Barclays and Morgan Stanley warn that leveraged derivatives could trigger a negative deleveraging spiral, amplifying market crashes.
Behind the global AI bull market rally, leverage risks are quietly building. US margin debt has surged to a record $1.4 trillion, while leveraged ETF assets have doubled to $220 billion in just two months. Meanwhile, South Korea's KOSPI index experienced violent swings and triggered a circuit breaker due to high leverage and concentrated positions. Barclays and Morgan Stanley have warned that highly leveraged derivatives could lead to a self-reinforcing deleveraging cycle, magnifying market declines. Investors should be alert: the leverage risk hanging over the AI-driven bull market could trigger a chain reaction if sentiment reverses.
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