Inside Seoul's High-Risk Trading Boom | WION World DNA

[00:00:00]South Korea's stock market boom has created a new generation of retail investors who are willing to take extraordinary risks in pursuit of wealth.

[00:00:08]While easy access to margin loans has allowed traders to borrow multiple times their capital, thereby magnifying both gains and losses. Our next report looks into the growing pressures facing young South Koreans priced out of the housing market.

[00:00:30]>> A 25-year-old university student in Seoul is becoming the face of South Korea's high-risk retail investing culture.

[00:00:39]Lee Seung-ho turned 20 million won, or about $14,000, into nearly 300 million won by using margin loans that allowed him to borrow up to five times his capital.

[00:00:52]Through a trading app, leverage was available with just a few clicks, [music] enabling him to amplify gains during a sharp rally in South Korean stocks. But when markets reversed course in May, >> [music] >> forced liquidations erased his profits in just 4 weeks.

[00:01:07]Lee says the losses were devastating, leaving him with less than his original investment, and forcing him to rethink his finances.

[00:01:17]>> On the day I suffered my biggest loss, I literally couldn't breathe at first.

[00:01:21]Everything suddenly went completely blank because my capital had been steadily building up, and then it disappeared all at once. First, there was this emptiness from that, and then there was this huge pressure from feeling like I could no longer maintain the kind of life I had been living, like taking taxis instead of the subway, for example.

[00:01:42]>> Lee's experience reflects a broader trend across South Korea's financial markets.

[00:01:48]>> [music] >> Margin loan balances reached a record 38.63 trillion dollar, or more than 26 billion dollars in June, according to the Korea Financial Investment Association.

[00:01:59]Broader data from the Bank of Korea showed total investor debt exceeded 60 trillion won, or over $40 billion at the [music] end of May.

[00:02:09]Regulators have grown increasingly concerned [music] as retail investors take on larger amounts of borrowed money to chase market gains.

[00:02:19]Following a surge in speculative activity, authorities moved to ban new listings of leveraged exchange-traded funds [music] linked to individual stocks just months after initially approving them.

[00:02:33]For many young South Koreans, the attraction of leverage is tied to economic realities beyond the stock market.

[00:02:41]Seoul's apartment prices now average around 14 years of salary, putting home ownership out of reach for many graduates. With limited opportunities to build wealth through the traditional assets, some see leverage investing as one of the few paths to financial advancement.

[00:02:59]>> My monthly allowance is 500,000 won, which is about $338.

[00:03:05]And with that, I felt like we're now living in an era where you really can't purchase real estate or an apartment.

[00:03:12]So, I started thinking that the stock market, the one capital market everyone can enter, was the only path to salvation.

[00:03:23]>> Despite losing most of his gains, Lee says he intends to return to leverage trading once he has saved enough money again. His long-term goal remains unchanged, buying an apartment in Seoul.

[00:03:36]>> My life has changed a bit now, from one where I was earning only financial income to one where I'm earning labor income. Because if you don't have money, you can't live. But still, until I graduate from university, if I manage to save 10 million won, which is about $6,660.

[00:03:53]I remember having turned 10 million won into 300 million won before. So, yes, I'll try again. Of course, I could fail again.

[00:04:04]>> Lee's story highlights both the opportunities and dangers of a market where easy access to borrowing can create rapid wealth, but also rapid losses. This is Bureau Report, we on World is One.