South Korean retail traders lose $1.45 billion in leverage wipeout

The scale of the fallout became clear by mid-July, as market swings triggered margin calls across more than 1.2 million retail accounts. Estimates suggest that between 320,000 and 460,000 accounts were fully liquidated by brokers between July 1 and July 13, locking in massive losses as prices tumbled. This collapse follows a period of aggressive borrowing, with records showing that retail debt in equities had ballooned to 60 trillion won by the end of May.

Forced sales have surged in tandem with the market instability, reaching 451.9 billion won in just the first two weeks of July. This follows a record-breaking June, which saw 1.12 trillion won in forced sales—the highest monthly total of 2026. The carnage is compounded by a structural shift in retail portfolios; many investors migrated capital from crypto markets into equities over the past year, only to be caught by the reversal in stock momentum.

Financial conditions are tightening further as the Bank of Korea moves to stabilize the economy. By raising its benchmark interest rate to 2.75% on July 16, the central bank has effectively increased the cost of borrowing for retail traders. This pivot toward higher rates threatens to limit the liquidity that retail investors have historically provided to both local equity markets and global digital asset exchanges.