South Korea's AI Bubble Just Popped (And It's Worse Than You Think)

Between the 13th and the 30th of July, somewhere between 320,000 and 360,000 South Koreans were sold out of the stock market. Not by choice. Their brokers did it for them, automatically, in the first minutes of trading, because the collateral behind their positions had fallen through a line written into a contract. Five weeks earlier, on the 22nd of June, the Korean market had been the best-performing on Earth. The KOSPI closed at 9,114.55, up 116 percent since the start of the year. Thirty-eight days later it closed at 5,593.56. A fall of 38.6 percent. Citi put retail investors' losses on a single class of product at 38.7 billion dollars — about 56 trillion won — in one month. Korea triggered seven market-wide circuit breakers in 2026. In the twenty-six years before it, the total was thirteen. And the index has already recovered most of it. That is not the good news it sounds like. This is the part the headline is pointing at: the people who were liquidated on the way down do not get the rebound. A forced sale is permanent. The market came back in August. They did not come back with it. There is a second reason it is worse than you think, and it is the one that should genuinely change how you see this story. The decision that turned an ordinary correction into a mass liquidation event was not made in New York, or in Redmond, or in any American boardroom. It was made in Seoul, eight weeks earlier, on purpose, by people who thought they were helping.