By: Yale Bock
The KOSPI is South Korea’s main stock market index and is the benchmark that is representative of the largest listed companies in South Korea. July proved to be a very volatile month for KOSPI investors as the index suffered from massive concentration, with Samsung and SK Hynix representing over 50% of its value. Even more concerning is the amount of leverage used by KOSPI investors, who have piled into leveraged single-stock ETFs. Guess which company ETF’s they loaded up on? Margin debt recently broke records as the total amount of margin loans currently added up to over two trillion won, and the typical historical amount is a little under half that figure. For indications of volatility, the KOSPI has lost a quarter of its value since late June. Even more difficult, by July 13, more than 1.2 million accounts were hit with margin calls, and 320,000-360,000 have been closed through forced liquidations by brokers. The liquidation rate is normally 2.1% but reached over 10% in July. This has affected one in thirty of all South Korean adults. Ok, other than many South Koreans with less of an appetite for Kimchi, so what?
Well, let’s look at what is currently transpiring in the US markets to see if there is anything similar taking place. Is there a concentration of value in a few companies? Uh, hello, earth to investors, but yes, the answer is clearly yes. It’s not in two, but more like ten. Increased leveraged single-stock ETF popularity? Check. Margin debt expansion? According to Convextrade, as of June 30, 2026, U.S. retail margin debt stands at about $1.50 trillion — near all‑time highs and well above historical norms, with leverage 4% of GDP, surpassing the 2021 peak. Seems similar to me, eh? However, US markets have many companies with high rates of earnings growth, and that is typically what is needed to support high valuations. Also, we have far deeper and broader markets with a plethora of industries to create value. Still, if you are using leverage to buy securities, remember the old Warren Buffett adage, “Only when the tide goes out do you discover who has been swimming naked.”
Originally published on August 2, 2026 in Y H & C Investments blog/ newsletter
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