South Korea’s Stock Market Crash Is Now Officially Worse Than 1997 and 2008

South Korea's benchmark KOSPI has plunged more than 33% in July, its worst month in history. The collapse surpasses the October 1997 IMF crisis, when the index lost 27%, and the October 2008 global financial crisis at 23%.

The index closed at 5,593.56 on Thursday, down another 1.23%, after a 5% morning rebound faded. A violent unwind of leveraged bets on the country's AI chip champions drove the record decline.

Leverage, AI Doubts, and a China Shock Ended a Historic Rally

The KOSPI more than doubled in the first half of 2026. It gained 116% at its peak and hit an all-time high of 9,385.59 in June, briefly making South Korea the world's sixth-largest stock market.

Leverage powered the climb. Outstanding leveraged bets reached a record 29.2 trillion won, roughly $19.7 billion, in early July. Retail investors piled into single-stock ETFs tied to Samsung Electronics and SK Hynix.

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