Asia’s wild AI frenzy stock swings ignite and destroy dreams of getting rich
By Stephanie Yang, Yoonjung Seo, CNN
Seoul (CNN) — Jennifer Ke, a 35-year-old working in operations at a cryptocurrency firm, never paid much attention to Taiwan’s stock market.
But her colleagues were constantly discussing their latest stock trades. One boasted of making at least one million Taiwanese dollars, or about $31,000, on a single stock.
Then, over dinner with a friend in April, Ke confessed she was constantly thinking about ways to boost her income.
“He told me, ‘Oh, you should just invest in stocks,’” Ke recalled. “I started to think that, ‘Okay, this might be the opportunity.’”
She wasn’t expecting to become a millionaire overnight. But with rising inflation and stagnant wages, she worried that an office job alone wouldn’t earn her enough money to live and retire comfortably.
Soon after that conversation, she began adding individual stocks to her limited portfolio of market funds and cryptocurrency.
She’s far from alone.
Across Asia, thousands of first-time investors have recently piled in to stock markets, hoping to cash in on the massive tech boom that boosted indexes in Taiwan, South Korea and Japan to record highs earlier this year.
A surge of spending on data centers and AI is leading to unprecedented profits for companies that supply semiconductors: Asia’s chipmaking giants Taiwan Semiconductor Manufacturing Company, Samsung Electronics and SK Hynix, have gained more than 50%, 100% and 150% respectively this year as US AI behemoths like Nvidia race to secure more chips.
Samsung said semiconductor profits increased more than 250-fold in the second quarter, while its rival SK Hynix also reported its operating profits had reached all-time highs.
As share prices have soared, newcomers like Ke are pouring in. According to the Taiwan Stock Exchange, new trading accounts reached a record high in March in monthly data since 2022. Meanwhile, in South Korea, retail investors are borrowing money at record levels to purchase stocks, data from the Korea Financial Investment Association showed.
But as dreams of getting rich have grown, so have the dangers of losing it all.
Tech stocks in Asia and the United States have swung wildly in recent weeks, at times wiping out billions of dollars as investors question whether the AI boom can justify the sky-high valuations.
With Taiwanese investors also borrowing near record levels, downturns could easily cause panic and forced selling, compounding losses and increasing the potential for a major market crash, said Chung San-Lin, a finance professor at National Taiwan University.
“When the market is very hot, many people want to become rich in a very short time,” he said. “They even quit their jobs to be full-time investors. I don’t think this is a good situation.”
A source of hope
As her stocks rose, Ke began checking the market every day. But after the recent market tumble, she became more reluctant to open her stock trading app for fear of being faced with losses.
Still, she said she plans to continue investing any spare money into Taiwanese stocks, and has been encouraged by the gains that have outpaced her holdings in broad market funds or cryptocurrency.
“I’m just hoping that I can get part of my income from investment,” she said. “Relying on salary, you’ll feel a lot of pressure if you only have one source of income.”
Her sentiment echoes that of many Taiwanese who have complained about slow wage growth and unaffordable housing prices, even as the economy has notched record quarterly growth of more than 14% earlier this year.
AI is exacerbating a similar economic fissure in South Korea. With semiconductor exports surging, workers at the nation’s top chipmakers have secured bonuses of about half a million dollars, or more. Now labor unions in other industries are also demanding more pay.
Worried about income inequality, government officials have floated the idea of a “citizen dividend” or public fund in order to redistribute profits from AI to the masses. But the popularity of stock trading has exploded this year as a quicker means to close the gap.
“There’s an old saying in Korea: if your relative bought some land, you will get a stomachache,” said Jung In Yun, founder and CEO of Fibonacci Asset Management Global, who oversees funds in South Korea and Singapore. “That kind of group mentality, where they constantly compare themselves with one another, facilitated this wave of retail investors coming into the market.”
South Koreans have traditionally favored investing in real estate over the stock market. But those who missed the housing upswing in the 2010s suddenly felt like they were falling behind as home ownership shot out of reach, said Yun.
To compensate, Koreans in their 20s and 30s turned to cryptocurrency as bitcoin prices began to soar, he said, but many lost money trading the volatile asset class. Now, as South Korean stocks have skyrocketed, retail investors see a new way to reverse their fortunes: in the form of the nation’s two most respected corporations, Yun said.
“Now, there’s hope,” he said. “People feel like, ‘You know what, I might not have done well in the bitcoin rally, but I might very well this time, in Samsung and SK Hynix.’”
In May, South Korea launched single-stock leveraged exchange-traded funds, or ETFs, a product that has fueled the retail trading frenzy by enabling investors to double profits – or losses – on a single trade. However, using credit to buy stocks means that when prices fall, those without the cash to cover their losses are quickly pushed out of their positions, and left with debt to pay.
When South Korea’s stock market plummeted last month by more than 40% from its June high, Yun said data suggested that many traders who were using leverage to try and multiply returns were wiped out.
“Most of the retail investors who got in recently, they’re bleeding,” Yun said. “This is how it ends. When there isn’t enough money left in their pocket, they stop.”
‘I became completely addicted’
Four years ago, 35-year-old Choi Eun-chong was worried that he would never be able to afford a home in South Korea’s capital city.
So the professional bodybuilder, now 39, started putting some of his savings into popular US tech stocks — names like Google, Apple and Nvidia. He had heard of other people who had made millions off the stock market, but he wanted to start small.
“Hearing those stories made me think, ‘If I get really lucky, maybe I could buy a house in Seoul before I’m in my late 30s or 40s,’” he said.
The next year, he invested all of his income from his YouTube channel. By 2025, he had doubled his money. That emboldened him to take bigger risks. He bought leveraged shares of Tesla and Palantir Technologies to double his returns. He also began investing in Korean stocks. One trade tripled his money in just a few days, netting him about $140,000, he recalled.
“I thought, ‘This is my chance to make some really big money!’” Choi said. “I became completely addicted to the dopamine rush of watching the numbers in my account, the money, the figures.”
He started buying friends gifts and treating them to meals, telling them about how well his trades were doing. Then, last summer, his stocks plummeted, and he lost half his money in one day. While the sudden loss shook him, he figured he could still make it all back. By the end of the year, he was down 600 million won, or about $410,000.
Even then, he couldn’t stop. Between January and March of this year, he lost about another $68,000, he said. He struggled to sleep or control his emotions. He didn’t tell anyone what happened and started avoiding his family.
He said he held shares of Samsung and SK Hynix briefly, but sold them before they made him much profit. Now, everyone seems to be talking about Korean stocks.
“I see so many people in their 20s and 30s buying at peak prices because of FOMO,” he said. “If stocks are rising and people are making money, that’s wonderful. But I’m someone who lost everything, so I can’t help thinking that one day things could shift.”
Last month, he came clean to his parents and shared his story on his YouTube channel. The 15-minute video, which garnered more than half a million views, resonated with others who had also lost money, anonymously detailing their own debts in thousands of comments. He said some sent him private messages, thanking him for his candor.
“I lost the 300 million won I spent 13 years saving, and now I have 50 million won in debt,” one person lamented online.
“I’m in my early 30s and I’ve lost everything I had. I’m now more than 70 million won in debt. For the first time in my life, I felt like giving up,” another wrote. “But I’m trying to pull myself back together.”
Volatility goes global
The AI boom and the retail investors chasing it have turned South Korea, once an overlooked corner of the Asia market, into a must-watch bellwether for the global tech industry. As retail traders have exacerbated volatility in recent months, the effects have been felt as far as the US. And the direction of Asian equities has come to rely increasingly on a few big names.
TSMC, which manufactures the majority of the world’s most advanced chips, accounted for about 42% of the Taiwan Stock Exchange as of June. The market valuation of Samsung and SK Hynix together make up more than 50% of South Korea’s Kospi index.
The connection between US and Asia markets grew stronger last month after SK Hynix started trading on the Nasdaq, in a record $26.5 billion foreign listing. A US-traded leveraged ETF tracking the company soon followed.
“It’s become a 24-hour cycle,” said Peter Kim, global investment strategist at KB Financial Group. “And retail investors, they want to be able to trade these things anytime they want.”
Over the past few years, South Korea has made regulatory changes to court foreign investors and boost its domestic stock market. The introduction of single-stock leveraged ETFs, which has trailed similar products tracking Korean stocks in Hong Kong and the UK, turbocharged the trading activity sparked by the memory chip shortage.
However, Kim said the government likely underestimated the risk appetite of the nation’s retail investors. Before they piled in to the Kospi, South Korean traders had proven to be a formidable force in US stocks and cryptocurrency, he said.
“If they like it, they just go for it. You cannot stand in the way. A lot of hedge funds in the past got wiped out fighting that retail rally,” he said.
Now, lawmakers, who have since derided the stock market as a “casino,” are trying to clamp down on speculation, by raising the minimum retail cash deposit for leveraged ETFs and suspending new listings. South Korea’s finance minister has apologized for launching the riskier products without careful consideration.
You Zih-yi, a 20-year-old economics major at Soochow University in Taipei, has begun checking South Korea’s market in the mornings, particularly SK Hynix and leveraged ETFs, for guidance on how Taiwanese stocks might move.
Five years ago, she started buying ETFs that track the broader Taiwan market but shifted more of her money into individual stocks last year, mostly in AI, which have since grown to about 80% of her holdings.
She said the recent buzz in Taiwan’s stock market has also prompted some former high school classmates to get into stock trading, while older family members, who have long been conservative investors in the stock market, have begun touting successful trades.
“They’ll say, ‘I bought this stock recently and earned a profit,’” she said. “Taiwanese people really like to share when they’ve made money.”
The-CNN-Wire
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