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Financial supervisors in Seoul implemented new constraints to limit the popularity of high-leverage investment products. Investors withdrew nearly $1 billion from leveraged exchange traded funds tied to chipmakers this month as enthusiasm for the AI trade cooled and regulatory actions to limit demand increased.
The retreat from these funds coincides with a broader market downturn, including a 2.7% slide in the Kospi index. The cumulative collapse in South Korean stocks has erased $2.5 trillion in market value, primarily hitting investors who bet on the AI boom.
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Key sources
- SOURCE@business“investor fervor over the AI trade cooled and regulators stepped up measures to curb demand”x.com
- SUPPORT@firstsquawk“SOUTH KOREA'S LEVERAGED ETFs LINKED TO CHIPMAKERS FACED NEARLY $1 BILLION IN OUTFLOWS THIS MONTH”x.com
- SOURCE@staunovo“The World’s Craziest Stock Market Has Turned Into a Fright Ride”x.com
- SUPPORT@polymarket“South Korea’s Kospi slides -2.7%”x.com