Huo Xing Finance reports that on July 31, renowned U.S. trader Ariel Hernandez posted that the Korean stock market’s AI semiconductor stocks experienced a sharp decline at the end of July due to excessive leverage. After a brutal leverage unwind, some traders were liquidated, making it difficult for the market to quickly rebound in a V-shaped manner to levels seen several weeks ago. Hernandez cited the leveraged liquidation event in the silver market earlier this year, explaining that once such trends emerge, they are typically accompanied by increased selling pressure and reduced willingness among new buyers to use leverage—making rapid reversals unlikely, and previous highs often taking months or even years to approach again.
Korean stock market struggles to recover after leverage-driven crash
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Summary
Market trends in South Korea’s AI semiconductor sector turned volatile at the end of July as excessive leverage triggered a sharp decline. Traders faced margin calls following a wave of leveraged liquidations, with U.S. trader Ariel Hernandez comparing the situation to a similar event in the silver market earlier this year. Such market cycles often result in increased seller supply and reduced buyer demand, making rapid recoveries unlikely. Previous highs may take months or even years to reappear.
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