Seoul's "Scorching" Summer: When Universal Stock Trading Meets the AI Bubble Feast
This summer in Seoul is suffocatingly hot.
Not the weather, but the stock market.
Mr. Kim, 30, living in Seongdong-gu, Seoul, is extremely busy. So busy that he even stares at candlestick charts on his phone while using the restroom. "I currently have 70% of my total assets invested in stocks," he admitted in an interview with Chosun Ilbo. "I feel there may never be such an opportunity to profit again."
Meanwhile, Ms. Park, 63, did something that made everyone around her think she had "lost her mind" — she closed her savings account holding 1 billion KRW. "Bank interest rates are only 3% to 4%, but people around me all made money through stocks, so I threw all my funds in." Her tone carried both worry about losing principal and anxiety of "fear of being left behind by the times."
Such stories are playing out every day in Seoul in the summer of 2026.
FOMO Sentiment: From Watching Charts in the Restroom to Mortgaging Homes to Invest in Stocks
On the afternoon of June 23, the Korean stock market suddenly crashed. The KOSPI index plunged 8%, triggering a circuit breaker that halted trading for 20 minutes. This was already the fourth time this year a circuit breaker was triggered due to a decline. At the close that day, SK Hynix and Samsung Electronics both fell over 12%.
Interestingly, just five days earlier — on June 18 — the Korean KOSPI index had only just surpassed the 9,000-point mark for the first time. And it had taken just over a month to break through 8,000 points.
This kind of roller-coaster market would scare most investors in other markets. But on Korean social media, the sentiment was surprisingly optimistic:
"If it drops quickly, the rebound will be amazing, and for some it could be a huge opportunity. I would never short."
"I did a second buy around 8,250 points. If it falls again tomorrow, I plan to buy more."
"It feels like an opportunity, I'm in a dopamine rush..."
Sound familiar? Isn't this the modern version of the "shoeshine boy theory"? When even people with zero financial knowledge start passionately discussing stocks and speculating, market sentiment has reached an extreme.
But to be honest, those who review history can easily judge that "the bubble is starting to burst." Yet for investors living in the moment, seeing their account numbers jump daily, they have countless reasons to "rationally" explain the market decline.
"Structural deformity, market overheating, extreme volatility" — these concerns may erupt one day. Just not now.
From Stock Market to Property Market: Where Is the Hot Money Flowing?
When the stock market makes money, where does it go?
The answer is simple: buying homes.
Data shows that as of mid-June, apartment prices in Seoul had risen for 72 consecutive weeks. The Korean government tightened mortgage restrictions to curb housing prices, but the result? Completely ineffective.
A report cited by Yonhap News reveals the truth: from January to April this year, about 3.7 trillion KRW (approximately 16.5 billion RMB) of funds raised from selling stocks and bonds flowed into the residential market. Among them, 65% of the funds, totaling 2.4 trillion KRW, were used to purchase homes in Seoul — and highly concentrated in traditional luxury areas like Gangnam's three districts.
Even more interesting is the data broken down by age: the 30-something age group had the highest amount of funds from stock and bond liquidation used for home purchases, reaching 1,259.243 billion KRW (about 5.629 billion RMB). It seems this generation is not only brave enough to "all-in" in the stock market but also willing to "leverage up" in the property market.
The wealth effect from stocks to real estate typically takes about six months. Based on the timeline of the Korean stock market rally, brewing since October 2025 and accelerating after April 2026, now is exactly the point when the property market takes over.
"Universal Stock Trading": Minors and Retirees Join In
The biggest incremental capital driving the current Korean stock market frenzy comes from retail investors.
How staggering is this figure? As of February 2026, the number of active stock trading accounts in Korea had exceeded 100 million. Korea's total population? About 51.1 million. This means on average every Korean has two stock accounts.
Even minors have been swept in. Toss Securities data shows that in the first quarter of this year, new account openings for minors under 18 surged nearly 10 times compared to the same period last year. Korean parents have popularized giving hot stocks (like Samsung Electronics) as gifts to their children.
Retirees are even more "at any cost." In Q1 2026, the surrender amount of Korea's three major life insurance companies reached 4.9 trillion KRW, up 16.3% year-on-year. Many elderly people canceled their insurance policies early and poured their retirement savings into the stock market.
Accompanying the market frenzy is leveraged capital. The margin loan balance of Korea's top ten securities firms has approached 36 trillion KRW (about 162.5 billion RMB), hitting a nearly 20-year high, almost doubling from a year ago.
Most worrying is the loan ratio of investors aged 50 and above, accounting for 62.3% of the top ten firms' total. The loan balance for those aged 60 and above surged from about 3 trillion KRW a year ago to 8.02 trillion KRW, nearly 2.7 times.
Think about it: a retired elderly person borrowing with leverage to trade stocks. Win, and they gain paper wealth; lose, and they lose the rest of their lives. This picture is truly distressing.
Foreign Capital Retreat: Who Is Catching the Falling Knife?
Unlike major developed markets, the investor structure of the Korean stock market is dominated by "retail + foreign capital," with local institutions not very prominent. In 2025, individual investors accounted for 43.7% of trading, foreign institutions 34.7%, and local institutions less than 20%.
The question arises: during the repeated new highs of Korean stock indices since April, what have foreign investors been doing?
The answer is: selling as prices rise.
Bank of Korea data shows that net foreign securities investment outflows in May reached $26.15 billion, of which stock fund net outflows were $31.83 billion, the largest monthly outflow on record. Since the beginning of this year, total foreign outflows have reached $77.83 billion.
Haitong International Securities data is clearer: foreign capital was the most determined to reduce positions in the Korean stock market over the past year, with cumulative net stock sales of about 106 trillion KRW, and net selling for 20 consecutive trading days starting from May 7.
Meanwhile, individual investors are accelerating their entry. From March to May, average monthly securities fund transfers reached 1,644 trillion KRW, significantly higher than the 2025 average of 1,098 trillion KRW.
This reminds me of a classic metaphor: when smart money starts leaving, who is the last bag holder?
Hidden Concerns: Is AI an Industrial Bubble or a Financial Bubble?
From a fundamental perspective, the current rise in Korean stocks is not a "castle in the air." Exports from the AI industry chain have grown significantly, expected to boost Korea's nominal growth rate by 5 percentage points year-on-year to around 9% in 2026.
But beneath the prosperity, concerns are emerging.
The rise of the KOSPI index has actually been entirely driven by two stocks: Samsung Electronics and SK Hynix. The combined market cap of these two companies accounts for nearly half of Korea's main board. SK Hynix has surged over 290% within the year, Samsung Electronics nearly 160%, and some leveraged products have risen as much as 800%.
What does this mean? The Korean stock market has been "highly hostage" to the semiconductor industry cycle. The semiconductor industry's severe cyclical fluctuations are unavoidable — in 2023, SK Hynix still recorded a loss of about 7.73 trillion KRW, the largest annual loss in history. The same company, the same factories, the same engineers — three years from record loss to record profit.
Goldman Sachs specifically warned in a recent Asia strategy portfolio report that Korean market volatility is amplifying. The surge in leveraged ETF AUM, option implied volatility, and margin balances has created a structural environment where dealer gamma rebalancing mechanically amplifies daily price swings.
Amazon founder Jeff Bezos once said: "AI is an 'industrial rather than financial' bubble — even if many companies ultimately fail, society will still be left with truly world-changing technological achievements."
For the industry, that's true. But for investors chasing highs with leverage, it may not be. The huge inflation of stock account values is merely paper wealth. Korea's stock market cap has surpassed India's, yet India's economy of $4.15 trillion is far larger than Korea's $1.93 trillion.
Currently, many market views compare the Korean stock market to Japan's stock market in 1990 — a boom followed by a quiet 30 years. But let's put ourselves in the shoes of Mr. Kim watching charts in the company restroom, or Ms. Park afraid of being left behind by the times: structural imbalances, overheated market sentiment, and extreme volatility may erupt one day.
Just not now.
