Summary of Key Points
Recently, the South Korean stock market hit a record high due to the booming semiconductor industry, leading some to describe it as a "golden age for investors." However, this was quickly followed by a sharp decline and circuit breakers, resulting in significant losses for many individual investors who used leverage. Behind this trend is a shift in South Koreans' investment preferences from real estate to the stock market, with social media exacerbating the enthusiasm for investing. In reality, there was no widespread collective frenzy in South Korean society. The prosperity of the semiconductor industry has not benefited ordinary workers significantly, and trade unions do not represent the general interests of the workforce. Additionally, the use of leverage by retail investors and the withdrawal of foreign capital have contributed to market volatility.
1. The Stock Market Rollercoaster Driven by Semiconductors: From Myth to Panic
The surge in the South Korean stock market began with an "epic rise" in the semiconductor sector, with stock prices of companies like Hynix and Samsung Electronics skyrocketing, driving the KOSPI index to new highs. Chinese internet forums even featured memes suggesting that South Korean women envied investors and that Hynix employee ID cards were highly sought after in matchmaking situations. However, the good times were short-lived, with the market experiencing a series of dramatic fluctuations, including circuit breakers.
The hardest hit were individual investors who used leverage to buy popular semiconductor stocks in the hope of quick wealth. For example, a friend of Manager Kim invested with borrowed money and almost lost all his savings after the market turned down. Those who had enjoyed the bull market, such as those who had been treated to meals or new cars, now had to sell their cars and bring their own lunches to save money. Many investors complained about losing money as soon as they bought stocks, and some even faced protests outside the National Assembly by angry investors.
2. The "Amplifying Filter" of Social Media vs. Real Restraint
The stories of people hugging and celebrating on the streets of Seoul that circulated on Chinese social media were exaggerated. South Koreans tend to be reserved and do not publicly display their earnings; investment topics are rarely discussed among friends, and the younger generation is even more reluctant to talk about their personal financial achievements with their bosses.
So, why does it seem like South Koreans are "crazy about investing in stocks?" The main factors are social media and media coverage: constant news of others making large profits, along with examples of friends who are successful, creates anxiety that one will fall behind if they do not invest, leading to an increase in new accounts and capital flowing into the stock market. However, this is more of a "statistical enthusiasm" rather than a true collective frenzy.
3. The Shift from "Wealth Through Real Estate" to "Changing Fate through Stock Investing"
In the past, South Koreans primarily built their wealth through real estate. Housing prices were rising, and it was easy to obtain loans, allowing working professionals to save their salaries and use them to buy homes, providing security for retirement. In recent years, the government has tightened real estate regulations, increasing taxes on multiple properties and restricting transactions, which has cooled down the real estate market.
At the same time, the government has been encouraging the capital market, trying to keep funds within the country and even attracting foreign investment. As a result, since around 2025, more South Koreans have shifted their money from real estate to the stock market, believing that investing in stocks can change their social status. This belief has been reinforced by the "wealth myths" spread online.
4. The Reality for Workers in the Semiconductor Boom: Trade Unions as a "Noble Elite"
Contrary to popular belief, trade unions in South Korea do not represent the interests of all workers. They are often seen as "noble elite" organizations, with members from privileged classes, and their demands for higher wages do not necessarily reflect the wishes of the general workforce. For example, when the Samsung Trade Union went on strike for higher wages, ordinary employees were not necessarily in agreement, as they felt that the company's profit growth was more important.
5. The Deep Causes of Market Volatility: Valuation Correction, Leverage Risk, and Withdrawal of Foreign Capital
The South Korean stock market has long faced issues, such as low valuations for outstanding companies (for example, semiconductor companies with higher revenues than their American counterparts but with P/E ratios of only around 10, compared to over 100 in the U.S.). Additionally, small and mid-sized stocks have been overpriced, making them less attractive to investors. Recently, however, the influx of real estate funds and increased interest from foreign investors have boosted the market. However, this has also brought risks: retail investors using leverage are vulnerable to market downturns, and the withdrawal of foreign capital has caused market adjustments. This is why the market experienced sharp declines and circuit breakers. Inexperienced investors using leverage panic when funds flow out, leading to stop-loss orders or forced liquidations.
Despite these challenges, Manager Kim remains optimistic, seeing this as a natural part of a mature market. He continues to buy shares in outstanding companies like Samsung and Hynix, believing in their long-term value.
In summary, the story of the South Korean stock market is not fundamentally different from what happens in other countries: investors enter the market when a trend is strong and use leverage, only to suffer losses when the market turns down. Cultural differences may contribute to the perception of a "fantastic" investment environment, but ultimately, people tend to think that others are living a better life.