The reality of young investors hit hard by the leverage investment frenzy sweeping South Korea's stock market is being revealed.
An episode of MBC's 'PD Notebook' airing on August 4 focuses on the high-risk investments made by the 2030 generation amid a volatile stock market characterized by rapid rises and falls.
In the first half of 2026, the domestic stock market experienced unprecedented investment enthusiasm. During this period, 40% of the 10 new stock accounts opened were attributed to the 2030 generation. As young people emerged as key players in the domestic stock market, investments that were once seen as a ladder for upward mobility turned into burdens of debt and losses for many.
This year, the KOSPI index surpassed 9,000 points, and the number of domestic stock trading accounts exceeded 100 million. Among the products that fueled this investment frenzy were leverage products that track the daily returns of individual stocks like Samsung Electronics and SK Hynix at double the rate.
The so-called 'Samsung and Hynix' double-leverage product, launched in May, recorded approximately 28 trillion won in trading volume within just three days of its release. This surge was driven by individual investors seeking high returns with minimal investment.
However, because leverage products are structured to multiply the daily fluctuations of their underlying assets, losses can also be magnified. When the market experiences repeated ups and downs, the cumulative returns can diverge from the simple volatility of the underlying asset, leading to a phenomenon known as 'negative compounding' where the principal quickly diminishes.
In June and July, when the KOSPI plummeted from 9,000 to 6,000 points, related leverage products fell by an average of over 60%, with some dropping as much as 80%. The market's volatility was so extreme that sidecars and circuit breakers were triggered more than 30 times in just two months.
Lee Chan-jin, head of the Financial Supervisory Service, stated regarding the risks of these products, "We should have done everything possible to prevent this," indicating that institutional responses were insufficient.
'PD Notebook' reports that the impact of this investment frenzy has disproportionately affected young investors with limited experience and capital. In an environment where it is difficult to secure housing and build assets solely through earned income, leverage investing was perceived as a last chance.
The program features the story of a 20-something groom-to-be, identified as A, who lost 180 million won after investing in leverage products to fund his new home. It also covers the case of a 30-something college student, B, who took on 12 million won in debt from student loans and credit cards after trying to invest while focusing on his studies.
For these individuals, investment failures extended beyond mere account losses. Their plans for marriage, education, and employment were disrupted, leading to increased debt burdens and psychological stress.
Success stories of investments shared on social media and online platforms have also been identified as factors that fueled young people's impatience. The fear of missing out (FOMO) led many to engage in high-risk investments, believing that everyone else was profiting while they were missing opportunities.
The issue of unqualified investment YouTubers and illegal stock advisory groups is also highlighted. In mid-July, an incident occurred where a member in their 20s attacked the leader of an advisory group after suffering investment losses.
This advisory group reportedly charged an annual fee of 5.8 million won and encouraged members to "sell everything except their underwear to buy leverage." The broadcast will investigate how indiscriminate investment recommendations and high-fee groups exacerbated investors' anxiety and losses.
The lack of financial education is also addressed as a major cause. Young people who did not receive systematic financial education at school or home have become reliant on fragmented information from social media and YouTube, exposing them to high-risk products.
John Lee, former CEO of Meritz Asset Management, pointed out that the absence of financial education is to blame, stating, "There has been no place to teach the risks of leverage investing, so young people have no choice but to feel anxious, and the more anxious they are, the more risky choices they make."
A survey conducted by Korea Investment & Securities in 2024 found that 41% of respondents among college student investors reported obtaining investment information through new media channels like social media and YouTube.
'PD Notebook' will also address what criteria investors should consider when contemplating investments in a market characterized by ongoing volatility and what principles are necessary for assessing high-risk products.
The episode 'Buying Risk: Leverage and Young People' will air today, August 4, at 10:20 PM.
* This article has been translated by AI.
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