350,000 Investors Wiped Out! Why Is the Korean Stock Market Crashing? Financial Expert Hsieh Reveals the Mechanism: Like Giving Hallucinogens to Speeding Teens

Global stock markets are in turmoil, with rumors spreading rapidly. Some blame China's imminent mass production of DUV lithography machines threatening ASML, causing semiconductor stocks to collapse. Others point to NVIDIA's leveraged funding support for OpenAI. However, the hardest hit has been South Korea's stock market, which plummeted over 10% in a single day. Financial expert Hsieh Jin-He, in a Facebook post, reveals he was among the first to warn against South Korea's launch of single-stock, 2x leveraged ETFs. Issuing double leverage at historical price highs, he says, is like letting teenagers speed and then feeding them hallucinogens—it's bound to end in disaster.

Stocks Up 39x, Then Leverage Added: Daily Rebalancing Causes 'More Gains When Rising, Deeper Falls When Falling'

Hsieh explained that MBC Television in South Korea recently sent a crew to interview him, discovering he was the earliest to raise the alarm on South Korea's single-stock 2x leveraged ETFs. When asked why he predicted disaster, he pointed to SK Hynix and Samsung. SK Hynix surged from 73,100 to 2,987,000 Korean won—a 39.86x increase. Samsung rose from 49,900 to 374,500 won, up 650%. Launching 2x leveraged ETFs at such peak prices is like giving hallucinogens to speeding teens—it's inevitable that things will go wrong.

Hsieh noted that while HBM demand boosted SK Hynix and Samsung steadily this year, since the launch of 2x leveraged ETFs, these stocks have swung wildly—either surging or crashing. This is due to the daily rebalancing mechanism, which amplifies price movements, creating even greater volatility: more gains when rising, deeper falls when falling.

350,000 Investors Wiped Out! Hsieh Identifies 4 Leading Indicators: Global Markets Can Only Breathe When Korean Stocks Stabilize

Hsieh emphasized that South Korean youth have become accustomed to fast profits. Even before 2x leverage, many had already gone 'all-in' with their life savings on SK Hynix and Samsung. After a year of relentless gains, people forgot that markets can fall. This time, 1.2 million investor accounts faced margin calls, and 350,000 were forcibly liquidated. Strangely, despite South Korea being the world's top-performing market from last year to this, 76.3% of investors are now losing money this year. The KOSPI dropped 10.84% yesterday, falling from its year-high of 9,385.87 to 5,992.91—a 36.14% decline. Last year, it led global gains; this year, it leads global losses.

Moreover, the backlash from leveraged products is spreading overseas. Hsieh highlighted four key leading indicators:

- Hong Kong's 2x Short Hynix (CSOP 2x Leverage Hynix ETF): down 30.24% in one day - Hong Kong's 2x Short Samsung (CSOP 2x Leverage Samsung ETF): down 26.73% in one day - U.S. 3x Semiconductor ETF (SOXL): crashed from $302 to $104.04 - U.S. 3x South Korea ETF (KORU): plunged from $1,279 to a low of $13.51 during trading

Hsieh stressed that many investors in 3x leveraged products have already been wiped out. Now, South Korea's market has become the epicenter of global anxiety. Investors worldwide must watch the Korean market open at 8 a.m. 'Only when the Korean market stabilizes can the world breathe again,' he said.

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