South Korea’s stock-market boom has reversed sharply, exposing record household debt, concentrated semiconductor risk and the dangers of leveraged products used by retail investors. The KOSPI fell 30% from its June 19 peak after a rapid artificial-intelligence-driven rally, while margin loans for KOSPI investment rose about 75% to roughly 30 trillion won by late June. Single-stock leveraged ETFs launched on May 27 with a 10 million-won minimum deposit and mandatory training, despite concerns about whether investors understood the potential losses. A July 28 Citi client note estimated retail losses on leveraged ETFs at $38.7 billion, while other estimates put losses at at least 58 trillion won. The fallout has included margin calls, forced selling, rising demand for psychiatric care and a suspected stabbing linked to stock losses. Authorities later tightened access, but borrowing and demand for leveraged semiconductor products in U.S. and Japanese markets recovered. The episode has increased political and economic pressure on President Lee Jae Myung’s government, undermined investor confidence and complicated efforts to overcome the Korea Discount and secure South Korea’s inclusion in MSCI’s developed-market index.