🔴KOREAN LEVERAGED ETF FRENZY SAW A PAINFUL BUST: South Korean leveraged ETF assets under management fell -82% from their June peak of $16.8 billion to as low as $2.9 billion, and now hover around $5 billion. The collapse follows a series of regulatory curbs introduced since July, including higher minimum cash deposits, a 20% cap on retail exposure, higher trading costs, and most recently, a mandatory 5-day mock trading course. Meanwhile, retail investors have also pulled -$1 billion from ETFs linked to Samsung and SK Hynix so far in August, their first monthly outflow since their launch in May. The June-July selloff showed how quickly excessive leverage can turn a sharp decline into a forced liquidation cycle, with more than 1.2 million South Korean trading accounts reportedly facing margin calls. The same dynamic was seen in the US, where leveraged bets contributed to the near-collapse of hedge fund Situational Awareness and amplified the selloff in AI-related stocks. As retail and institutional investors increasingly favor short-term leveraged trades, crowded positions can leave markets vulnerable to sudden waves of forced selling. When leverage builds up beneath the surface, the next selloff can be far more violent than most expect.