14 Million Korean Retail Investors Borrow to Chase AI Chip Stocks; Kospi Suffers 10% Weekly Drop After Nearly 200% YTD Rally
N.R. Finch
About 14 million South Korean retail investors piled into AI chip stocks on borrowed money, driving Kospi up nearly 200% in twelve months; when global AI spending expectations wobbled, the index dropped roughly 10% in one week — stress-testing how much of the AI boom is real.
Who are the "ant army," and what did they do?
South Korea's roughly 14 million retail investors — known locally as the "ant army" — spent the past twelve months buying AI-related chip stocks, pushing Kospi to an all-time high with a cumulative gain near 200%.
This means → the rally was not institution-led; it was driven by retail money flooding into a single trade.
Per Bloomberg, many of these investors used borrowed funds; leveraged single-stock ETFs became a focal product.
Why can a market drop 10% in one week?
Global AI infrastructure spending expectations wavered, sentiment reversed fast, and Kospi fell roughly 10% in a single week.
In plain terms = when everyone bets the same direction on the way up, there is no cushion on the way down — one shift in narrative triggers a stampede.
South Korea's equity market is worth about $4.7 trillion but is heavily concentrated in just two names — Samsung Electronics and SK Hynix — making the index extremely sensitive to any change in the AI story.
How serious is the leverage risk?
Retail investors have been heavily using margin loans and leveraged ETFs; South Korea's top financial regulator has publicly acknowledged that these products carry risk.
This means → a rare high-water-mark warning from regulators, signaling that leverage levels have drawn official concern.
Put simply = borrowing to buy a rising market amplifies gains on the way up — but it also amplifies losses on the way down, and can force liquidation at the worst moment.
Why is South Korea's market the clearest test case for the AI boom?
Samsung and SK Hynix are among the world's top suppliers of AI chip memory; South Korea sits at a critical node in the global tech supply chain.
This reflects a level of dependence on AI capital expenditure that is arguably the highest of any major equity market.
The core debate now: is the AI boom a sustainable industrial cycle, or a bubble formed by capital crowding into the same trade? Analysts say South Korea's market trajectory will provide one of the clearest answers.
Content is for reference only, not financial advice.