Leverage Risk: The Hidden Landmine of the AI Bull Run
The current global AI bull market appears strong on the surface, but the underlying leverage risks cannot be ignored. Data shows that margin debt in the U.S. stock market has climbed to an all-time high of $1.4 trillion, while assets under management in leveraged ETFs have doubled over the past two months to a staggering $220 billion. This means that once a market correction occurs, highly leveraged positions could trigger a cascade of forced liquidations, amplifying downside moves.
South Korea's Warning: High Leverage and Concentrated Positions Spark Turmoil
The KOSPI index recently experienced extreme volatility due to high leverage and concentrated holdings, even triggering a circuit breaker. South Korean retail investors have heavily used leverage on AI-themed stocks, leading to a surge in market volatility. This case serves as a wake-up call for global investors: when leverage is concentrated in a few hot sectors, systemic risk rises significantly.
Wall Street Warnings: Leveraged Derivatives Could Trigger a Negative Feedback Loop
Barclays and Morgan Stanley have issued reports warning that leveraged derivatives could cause a "negative deleveraging spiral." Specifically, if stock prices fall and trigger margin calls, investors are forced to sell assets, further depressing prices and creating a self-reinforcing downward cycle. This mechanism was observed during the liquidity crisis of March 2020, and with current leverage levels far exceeding those of that period, the risk should not be underestimated.