Commentary adapted from Beyond Insights' founder and chief trainer Kathlyn Toh's LinkedIn posting on 17-July-2026.

The South Korean stock market is in the middle of a major sell-off, and we think it deserves your attention, not your panic. Our founder, Kathlyn Toh, flagged that the root cause is an over-leveraged margin call storm. A margin call happens when an investor is unable to fulfil their borrowing requirements, and the broker forces the position closed, whether the investor is ready or not.

This is not a small ripple. As of 13 July, more than 1.2 million leveraged accounts in South Korea had triggered margin calls, and somewhere between 320,000 and 360,000 accounts were forcibly liquidated in full. On 16 July, the KOSPI index plunged 6.37% in a single day, just one day after it had surged 6.24%. Plunge, rally, plunge again. That is what a deleveraging storm looks like from the inside.

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Watch out, the US market could feel this too

Here is what Kathlyn wants every investor to understand: this is not just a South Korea story. If South Korean investors are forced to sell their US positions to cover margin calls at home, that selling pressure does not stay local. It shows up in New York too, especially in the same sector.

For the US market, Kathlyn's guidance is to let it stabilise first from the major profit-taking, especially for semiconductor-related stocks. We are already seeing early signs of this spillover. On 16 July, Japan's Nikkei 225 dropped 2.79%. In the US session the day before, Micron Technology fell over 8%, SanDisk fell over 8%, and the SOX semiconductor index dropped more than 2%. When one market panics, the ones connected to it feel the tremor.

It is not just leverage. It is the memory chip story too

Other than the over-leverage issue in the South Korean market, the big sell-off in memory-related companies (HBM and DRAM) was also triggered by recent news of huge additional capacity coming into the pipeline. When more supply is announced for a product whose price has been running hot on scarcity, the market reprices fast, sometimes faster than the fundamentals actually justify.

This is exactly why Samsung Electronics and SK Hynix, together with their leveraged ETFs, sat at the centre of this storm. SK Hynix fell nearly 40% from its June all-time high. On 13 July alone, it dropped over 15%, its worst single day in eighteen years. Its 2x leveraged ETF fell more than 66% at the worst point. That is the mathematics of leverage working in reverse. It amplifies gains on the way up, and it amplifies losses on the way down, sometimes disproportionately, because of how these products rebalance daily.

Big funds are taking profit where they are sitting on the biggest gains

Big funds are continuing their profit-taking in semiconductor stocks, especially the ones where they are already sitting on huge profits from earlier in the run. This is normal behaviour, not a mystery. When a position has run far and fast, professional money looks for the exit door before the crowd does. That is not pessimism. That is discipline, and it is exactly the mindset Beyond Insights teaches its students to adopt.

The chart is telling us the story is not finished

The semiconductor industry ETF chart, SMH, shows the sell-off is not done yet, as it just broke another key level of support. Charts do not predict the future with certainty, but they do tell you where the crowd's conviction currently sits. A broken support level tells you sellers are still in control, for now.

For students who trade intraday, there is an opportunity to trade intraday in the meantime. For investors, Kathlyn's advice is to continue monitoring the key support level and avoid buying into a downtrend. There is a difference between being brave and being early, and buying into a downtrend before it has confirmed a bottom is usually the second one.

The world is more connected than most people realise

This is also a timely reminder that the world's stock markets are getting more interconnected. What affects one market can affect the rest. The semiconductor supply chain is not limited to one country. The ecosystem is global.

It is worth holding two facts side by side here. Just weeks before this sell-off, South Korea announced an 800 trillion won, roughly $520 billion, investment plan with Samsung and SK Hynix to build four new chip fabrication plants, betting on the country's future in AI infrastructure. The long-term structural demand story for AI compute has not disappeared. What broke was the leverage sitting on top of it, the borrowed money that turned a real trend into a fragile one.

That is the difference between the macro story and the trading around it, and it is exactly why Beyond Insights teaches the top-down 40-30-30 approach. The 40% macro picture (AI demand, government backing, global chip investment) can still be intact even while the 30% industry-level dynamics (a leveraged, crowded, one-sided trade) fall apart. As Kathlyn often reminds her students, you cannot judge a company's stock purely on the macro story, and you cannot judge the macro story purely on one week of price action either. They need to be read together.

Why a process matters more than a prediction

It is important to have a systematic process to follow in investing and trading, rather than an afterthought. It is impossible to take care of all possibilities and dependencies. Nobody, no matter how experienced, can see every domino before it falls. Not the margin call cascade in Seoul. Not the ADR listing that pulled liquidity from one market to another. Not the capacity announcement that repriced an entire sector overnight.

With a process that includes pre-defined risk management, excessive losses can be avoided. This is what Kathlyn means when she says Protect is non-negotiable in the STPM framework taught at Beyond Insights. Students are trained to decide their risk before they enter a position, not after the market has already decided it for them.

With risk taken care of, the mind is more ready when opportunities arise in the midst of uncertainty. That last part is the one most people skip. Risk management is not just about avoiding damage. It is what frees up an investor's mind to actually see the opportunity when the dust settles, instead of being too shaken, or too depleted, to act on it.

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Disclaimer: This commentary is adapted from Kathlyn's personal market observations, shared for educational purposes by Beyond Insights. It is not a recommendation to buy or sell any security, and past performance does not guarantee future results. If you would like to learn the full systematic approach behind reading macro, industry, and company-level signals together, and how Beyond Insights builds risk management into every strategy from day one, join us for our next free webinar. Reserve your seat to learn the step-by-step method we teach our students.

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All content in this article is based on publicly available data and is intended for educational purposes only. It does not constitute financial advice or a recommendation to buy or sell any security.