Still dancing, but near the edge
South Korea’s market is doing that very human thing where everything looks fine right up until it doesn’t. AI enthusiasm is keeping the lights on, but the underlying setup in KOSPI and names tied to memory chips is looking increasingly stretched.
The leverage problem
Since March, leverage in Korean AI and memory stocks has been climbing. That’s fine in a world where prices only go up and everyone gets to feel like a genius. But leverage cuts both ways. If the trade turns, margin pressure can force selling, which can turn a normal pullback into a very non-normal air pocket.
Why investors should care
This isn’t just a local-market soap opera. EWY and Korean chip names can be a barometer for global AI sentiment, and a disorderly unwind in Korea could spill into broader semiconductor and risk assets.
- More leverage means more forced selling risk
- AI enthusiasm can mask weak positioning underneath
- The July crash is the kind of move nobody wants on repeat
Big picture: the AI story may still be intact, but the plumbing underneath it looks a little too confident for comfort.