Korean Brokerages Hit Credit Caps on AI Stock Buying as Kospi Nearly Triples
Updated
Updated · The New Yorker · Jun 15
Korean Brokerages Hit Credit Caps on AI Stock Buying as Kospi Nearly Triples
2 articles · Updated · The New Yorker · Jun 15
Summary
Korean brokerage firms have reached regulatory limits on customer credit after a year of heavy leveraged buying tied to AI-related stocks.
The squeeze followed a near-tripling in South Korea’s Kospi over the past 12 months, with investors using margin loans to expand bets on chipmakers such as Samsung Electronics and SK Hynix.
The report casts South Korea as an early flashpoint in a global AI stock frenzy, where leverage is amplifying gains and raising the risk of a sharper reversal.
It argues the AI boom resembles past "productive bubbles" like railroads and the internet—creating real infrastructure, but still vulnerable to credit stress, defaults and wider economic fallout when speculation breaks.
Will the AI gold rush end in a crash like the 1873 railroad boom, or build the foundation for tomorrow?
Can the AI boom survive escalating geopolitical risks and the fierce global competition for critical resources?
If AI is the future, why are software job postings plummeting and new computer science graduates unemployed?
KOSPI’s 2026 Surge: AI Mania, Margin Debt Records, and Systemic Risk
Overview
In 2026, the KOSPI soared far above its starting point, driven by a global boom in artificial intelligence that fueled a powerful rally. This surge was marked by extreme volatility, as weeks of gains were quickly erased in May and June due to a semiconductor selloff, a hawkish U.S. Federal Reserve, and record market leverage. The rally’s foundation was the strong demand for semiconductors, but high leverage made the market fragile. As a result, sharp corrections became common, highlighting the risks of concentrated gains and heavy borrowing in the Korean stock market.