South Korea's tech-heavy Kospi has whipsawed retail investors after an AI-fueled rally in chip stocks reversed sharply, erasing large paper gains and exposing the risks of leverage (borrowing to amplify trades). The index more than doubled from the start of the year to top 9,000 points in mid-June, then fell to 5,500 within weeks before recovering to about 6,800. BNY's Wee Khoon Chong described the June-to-August sell-off as one of the sharpest corrections in the index's history, comparable to declines during Covid-19 and the 1997 Asian financial crisis, while pointing to concern over heavy AI spending as a key driver. The downturn has hit personal investors who crowded into names such as SK Hynix, Samsung and Nvidia-linked themes, with some saying losses disrupted plans to buy homes or start businesses. By the end of July, an estimated 1.2 million South Korean personal investor accounts had faced margin calls (broker demands for added funds or debt repayment after losses), underscoring how borrowed money intensified the damage. Societe Generale's Frank Benzimra said leverage among retail traders has been rising in South Korea as well as in Taiwan and the US, raising risks around AI-related stocks. Investors interviewed said the episode was a warning against concentrating savings in a single market bet, even as some continue to hold shares in hopes of a rebound.