South Korea's KOSPI Plummets 20% in Two Days Amid Massive Deleveraging

Key Facts

1The KOSPI index shed 20% of its value in just two trading sessions.

2The market recorded its biggest one-day drop since the 2008 global financial crisis.

3Excess leverage triggered margin calls and forced liquidation of positions by retail investors.

The South Korean stock market faced a historic collapse as the KOSPI index shed 20% of its value over just two trading sessions. This dramatic selloff represents the market's most severe one-day decline since the global financial crisis of 2008. Analysts attribute the rout to excessive leverage among retail investors, which exacerbated the downward spiral as prices began to fall. A massive wave of margin calls triggered forced liquidations of positions, intensifying the technical pressure on the index. The systemic nature of this event has raised immediate concerns regarding the stability of the USD/KRW exchange rate and broader regional sentiment. Market participants are now closely monitoring the potential for further contagion across Asian markets and the impact on exchange-traded funds like EWY.