The Korean Market Is Too Far Gone - and what this means for us
u/grantresolve ·
Reddit — r/wallstreetbets
· July 22, 2026 at 03:19
· ⬆ 502 pts
· 💬 149 comments
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Summary
The post warns that the Korean stock market’s severe margin-call cascade (3.4% of adults margin-called, 50% of market in two stocks) is a canary in the coal mine for the US due to record-high leverage and extreme concentration in AI stocks.
Author’s thesis: Any crack in AI capex expectations could trigger a US crash similar to Korea’s, with forced selling begetting more forced selling.
Quality: speculative opinion/risk warning, not a data-backed deep dive; it’s more noise than rigorous DD, but cites real events and parallels.
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3.4% of Koreans got margin called. Not 3.4% of brokerage accounts with margin. 3.4% of the adult population. That’s 1 in 10 retail trading accounts. 1.2 million people.
50% of the market is 2 stocks. Samsung and SK Hynix.
They experienced what they call black Tuesday last week. 10% down in a single day. They pulled down multiple markets in Asia with them.
These markets didn’t even come down for any real reason - just the idea that maybe AI capex will decrease.
Korean Warren Buffet is probably out there with 600% margin on 3x leveraged ETFs buying the dip while the Korean stock market is in free fall.
This tells a story about the US too which is what many people are missing. We’ve reached the highest level of leverage used in the stock market in history in the US. Typically right when levels of leverage peak is also right before a crash.
34% of the S&P is in 10 companies, all of which are making the same directional bet on AI.
We’re seeing high levels of speculation. Everyone is betting AI spending will persist. Any fear around AI spending causes stocks to plunge even if it’s irrational.
My guess is if AI capex doesn’t end up meeting expectations or people become scared it won’t, eventually we will also see a big slide in the US market. And then worse, we’ll see margin calls and forced selling. Just like Korea that’ll trigger more selling causing us to end up in a cycle of forced selling, leading to a big plummet in stock prices.
The end result is bad for everyone invested right now.
Not financial advice.