South Korea's stock market is a big leveraged AI bet

An increasing share of regular folks in South Korea are going all in on the country's stock market — borrowing money so as not to miss out on the AI-fueled stock boom there.

Why it matters: The entire economy is now hanging on the success of a few chipmakers.

The latest: South Korea's KOSPI index, which crossed 8,000 for the first time on Tuesday, is up 207% from a year ago.

• A few big, newly minted trillionaire chipmakers are behind the surge, including SK Hynix and Samsung.

The big picture: A mania for stocks has swept the country, as Bloomberg reported earlier this year.

Zoom in: And retail traders are borrowing to fuel the buying binge: Margin loans are at a record high, according to reporting earlier this month in the Korea Times.

• Middle-aged and older Koreans are increasingly getting in on this — borrowing money so as not to miss out, "mirroring" younger generations but "often with larger sums at stake."

Threat level: Some of these folks are risking retirement money with leveraged bets — Korea already has a high poverty rate (40%) for older adults.

• If the AI trade falters, the country's entire economy is on the line, writes Ed Yardeni at Yardeni Research.
• "Asia's fourth‑largest economy increasingly resembles a giant leveraged bet on AI."

The bottom line: What could go wrong? See our piece on how American investors are using a record amount of borrowed money to bet on stocks.