South Korea's stock market has turned into a giant leveraged casino, according to a stunning report from the widely followed financial commentary account The Kobeissi Letter on July 3. The data shows that the total assets under management (AUM) of leveraged ETFs listed in South Korea have skyrocketed to a record $45 billion, an increase of 800% since the start of 2026. Most eye-popping is that a single 2x long ETF tracking SK Hynix has surpassed those of Nvidia and Tesla to become the world's largest single-stock leveraged product. With foreign capital fleeing, the extreme leverage taken on by Korean retail investors has sparked intense fear of a potential market crash.
The AUM of Korean leveraged ETFs exploded in the first half of 2026, jumping 800% to roughly $45 billion. The data further reveals that the ratio of "leveraged exposure to free-float market capitalization" in South Korea has hit a record 2.9%, more than tripling since January. This means that daily market swings are being heavily amplified by borrowed money, creating a ticking time bomb of cascading liquidations.
SK Hynix 2x Long ETF Crushes Global Peers
The most shocking figure is a 2x long SK Hynix ETF listed in Hong Kong. Chased by Korean retail speculators, its AUM peaked at $15 billion, making it the largest single-stock leveraged product globally. In comparison, the 2x long Nvidia ETF never exceeded $10 billion, and the 2x long Tesla ETF stayed below that level. Micron and SanDisk products are even smaller. Korean leveraged bets on one stock now dwarf those on American tech titans.
Social Media Erupts: Foreigners Exit, Retail Gambles
The post drew over 75,000 views and heated debate. Most overseas traders expressed alarm. Comments warned that "just a little volatility can wipe them out," while others blamed Korea's speculation culture, calling retail investors "gamblers."
A more dangerous signal is the divergence between foreign and domestic flows. While Korean retail investors borrow heavily to chase leveraged ETFs, smart money is exiting. According to separate data, foreign investors have net sold over $140 billion in Korean stocks over the past 12 months. As foreigners dump shares and retail traders catch falling knives with 2x or higher leverage, the bomb in Korea's stock market may be ticking.