Korean Retail Investors Face 25% Wipeout in AI Stock Rotation

South Korean retail traders who swapped memecoins for semiconductor stocks in late 2025 rode a 180% rally on the KOSPI, then watched it collapse by 25% in four weeks. The move has left a cohort of leveraged investors nursing losses, several traders said.

By mid-2026, the index had shed roughly a quarter of its value. Forced liquidations hit leveraged single-stock ETFs tracking SK Hynix and Samsung Electronics, which had attracted tens of billions of dollars in assets during the run-up. The wipeout was concentrated in just a few days. March saw a 20% drop in two sessions, driven by profit-taking, geopolitical tensions and growing skepticism about whether AI capital expenditure could sustain its pace, traders said.

The “Great Korean Pivot” began in late 2025, when retail investors abandoned crypto trading, particularly memecoins, for AI-linked equities. Trading volumes on domestic exchanges Upbit and Bithumb plummeted as money flowed into stocks. By March, after the equity crash, some capital began returning to crypto platforms. Exchange activity climbed from the lows of the pivot, signaling a potential rotation back into digital assets, the traders said.