South Korean Student's 5x Leverage Trade Gains Evaporate After May Market Correction

According to Reuters on July 21, a 24-year-old South Korean university student using 5x leverage saw initial gains of approximately 15 times (from 20 million Korean won to nearly 300 million won) entirely wiped out within 4 weeks following May's stock market volatility, with forced liquidations pushing the account below the initial investment.

South Korea's margin lending balance reached a record 38.63 trillion Korean won on June 24, according to the Financial Investment Association, before falling to 34.37 trillion won by July 15. The KOSPI index surged over 100 percent in six months before experiencing multiple drops exceeding 10 percent. South Korean regulators have suspended new listings of single-stock leveraged ETFs, products approved only two months prior.