Understanding Margin and Leverage in the AI Market’s Turbulent Transformation

AI Stocks Experience Volatile Market Shift

As of July 2026, the South Korean stock market has seen significant volatility, particularly among AI-related stocks. The market initially surged due to a massive influx of ~$10 billion into newly approved 2x leveraged ETFs tracking tech giants amid the AI boom. However, a major downturn followed the release of the Kimi K3 AI model by Beijing-based Moonshot AI, which caused widespread concerns that existing AI infrastructure investments could become redundant.

Goldman Sachs reported that over 1.2 million leveraged retail trading accounts in South Korea—approximately 3.4% of the adult population—triggered margin calls due to declining stock values. The fallout led to forced liquidations, with prominent investors like Leopold Aschenbrenner unwinding their positions amidst substantial trading losses, which contributed to further declines. This cycle of overleverage highlights the pain often necessary for market corrections before a healthier investment climate can emerge.