South Korean retail investors have reportedly lost about 2.15 trillion won, or roughly $1.45 billion, from leveraged trading over the past month as sharp market swings triggered widespread margin calls.
- South Korean retail investors reportedly lost $1.45 billion as leveraged positions unraveled during market volatility.
- Traders in their 20s and 30s represented 62% of accounts facing forced liquidation, reports estimate.
- Korea’s stock leverage unwind follows a retail shift from crypto into equities during the rally.
According to market reports, more than 1.2 million retail leverage accounts had reached margin-call thresholds by July 13. Estimates placed the number of accounts fully liquidated by brokerages between 320,000 and 460,000, although the broader account figures have not been independently confirmed by regulators.
Young investors bear the largest share of liquidations
Investors in their 20s and 30s reportedly accounted for 62% of accounts hit by full forced liquidations. Many retail traders had built leveraged positions during South Korea’s strong equity rally, increasing their exposure to losses when prices reversed.
The losses followed months of heavy borrowing by retail investors. Reuters reported in June that borrowed investment in South Korean equities had reached a record 60 trillion won by the end of May. Regulators were already reviewing safeguards around leveraged exchange-traded funds after acknowledging concerns about their rapid growth.
Forced sales accelerate during volatile market swings
The Korea Financial Investment Association has recorded a sharp increase in forced stock sales linked to unpaid brokerage balances. Market reports put actual forced sales from unsettled trades at 451.9 billion won between July 1 and July 13.
The pressure had already been building before July. According to Seoul Economic Daily, forced sales reached 1.12 trillion won in June, the highest monthly total of 2026. The figure rose from 707.6 billion won in May as sharp KOSPI swings repeatedly caught leveraged investors on the wrong side of the market.
When investors use short-term brokerage credit, they must provide additional funds if their positions fall below required levels. Brokers can sell the shares when clients fail to cover the shortfall, locking in losses during periods of falling prices.
Retail money had shifted from crypto into stocks
The leverage rout follows a major change in how South Korean retail investors allocated their money. As previously reported by crypto.news, crypto holdings on the country’s major exchanges fell from $83.3 billion in January 2025 to $41.4 billion by February 2026 as investors increasingly moved toward equities.
Crypto trading activity also weakened as the stock market gained momentum. A later crypto.news report found that won-based crypto trading volume fell 71% between August 2025 and May 2026, while KOSPI trading volume rose 243%.
The current equity-market losses therefore affect a retail investor base that had already moved substantial capital away from digital assets and into stocks.
Tighter financial conditions add another pressure point
The deleveraging comes as South Korea also shifts toward tighter monetary policy. The Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75% on July 16, its first increase since January 2023.
Higher borrowing costs could place additional pressure on leveraged trading while making investors more cautious toward risk assets. The effect may extend beyond equities because South Korea remains an active crypto market where retail trading can influence global volumes, particularly for altcoins such as XRP. As previously reported, Korean trading activity remains an important source of liquidity for several major digital assets.
