Svmuu News: Lee Seung-ho, a 24-year-old college student in South Korea, used a trading app to trade with 5x leverage, growing the 20 million won he had saved during his military service to nearly 300 million won at one point—about 15 times his initial principal. However, following severe volatility in the South Korean stock market this past May, his brokerage firm triggered a series of forced liquidations, causing all his gains to evaporate within four weeks, and his account balance ultimately fell below his initial investment.
Lee noted that high-leverage trading accelerates wealth growth, but consistently betting with a fully invested position can ultimately lead to losses. Data from the Korea Financial Investment Association shows that the balance of margin loans in the South Korean stock market rose to a record 38.63 trillion won on June 24 and remained at 34.37 trillion won as of July 15.
During the same period, the KOSPI index more than doubled over a six-month span but subsequently experienced multiple declines of more than 10% over the following weeks. South Korean regulators have announced a suspension of new listings for leveraged ETFs linked to individual stocks and stated that they will strengthen risk controls during periods of heightened market volatility. (Reuters)