China throws spanner into tech boom<\/a><\/p>\n Elon Musk’s latest venture sent global stock markets to dizzying heights, but its performance since does not augur well for the company or the future of the AI boom.<\/p>\n After borrowing heavily from a trading platform, Lee’s stock plunge had delivered a 15-fold increase in his savings over the previous year before his fortune evaporated in just four weeks.<\/p>\n The shockwaves are spreading across the globe as investors fret the meltdown on one of the world’s most technology-intensive markets may be an omen of things to come.<\/p>\n Concerns are mounting globally about the stupendous, some say stupid, level of spending by the world’s leading technology firms that has begun to rattle Wall Street.<\/p>\n Once considered an exotic financial sideline, the South Korean Kospi has become one of the most acutely observed markets in the world; many view it as a possible harbinger for the end of a four-year boom in technology stocks.<\/p>\n A debt-fuelled boom<\/p>\n More than a million South Koreans are underwater as a result of the crash, and several hundred thousand have lost everything, and then some.<\/p>\n They borrowed to the hilt to take part in a frenzied splurge on technology stocks, particularly memory chip makers, in a market now experiencing a savage reversal.<\/p>\n Nothing, not even the stellar earnings of the country’s two biggest chip makers, has been able to stem the panic, primarily because the debt that fuelled the stock market boom is now accentuating the crash.<\/p>\n Many South Koreans have borrowed money to invest in tech stocks, particularly memory chip makers.\u00a0<\/p>\n \u00a0 (Reuters: Max A Cherney\u00a0)<\/p>\n Repeated attempts by Seoul’s market authorities to put a handbrake on the losses by suspending trading have only made the problem worse.<\/p>\n The collapse, which began last month, follows an astonishing rise on the country’s market index, the Kospi, over the past 12 months.<\/p>\n At its peak, it had surged more than three-fold in just a little over a year.<\/p>\n That was the yang. Now comes the eum.<\/p>\n For the KOSPI, what went up is coming down.\u00a0 (Source: Trading Economics)<\/p>\n A political leg up<\/p>\n It began with a constitutional crisis and an attempted coup.<\/p>\n To divert attention in the aftermath of last year’s political upheaval, new President Lee Jae Myung encouraged citizens to invest in the local stock market in a series of fiery nationalistic speeches about South Korea’s global standing.<\/p>\n It was time, he said, for the “Korea Discount” to be erased and replaced,<\/a> perhaps, by a “Korea Premium” and for the nation to rely less on property speculation.<\/p>\n “The Republic of Korea as a market remains undervalued,” he said.<\/p>\n “I will create an objective environment to make Korea the world’s best investment destination.”<\/a><\/p>\n As part of the program, rules around using debt to invest were loosened and debt-infused investment products \u2014 known as single stock leveraged Exchange Traded Funds \u2014 spurred South Koreans to plunge everything, and more, into the market.<\/p>\n The timing was both impeccable and tragic.<\/p>\n Chip makers were in hot demand as the big American tech firms, having spent trillions of dollars in the race for AI dominance, began the next phase of the boom: rolling out AI to the world.<\/p>\n![\"a](\"https:\/\/www.europesays.com\/korea\/wp-content\/uploads\/2026\/08\/c4847c2df9d8950c3d25a32d0943fcd6.jpeg\")
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