Stock markets in Japan, South Korea, and Taiwan experienced significant volatility last week, oscillating between all-time highs and sharp selloffs as the artificial intelligence boom continued to drive investor enthusiasm [1]. This rally has not only propelled these markets to strong performance so far this year but has also led to a surge in leveraged trading, particularly among retail investors [1]. The increased use of margin accounts and leveraged instruments has amplified price swings, with investors rapidly entering and exiting positions in response to the ongoing AI rally [1].
Market participants have observed that the heightened leverage has made these markets more sensitive to both positive and negative news, resulting in intensified short-term price movements [1]. Technical analysts noted that support and resistance levels are being tested more frequently, and stop-loss orders are being triggered more often, further contributing to market instability [1].
Looking ahead, the trend suggests that as long as optimism around artificial intelligence persists, volatility is likely to remain elevated, especially if retail investors continue to employ high levels of leverage [1]. Market watchers are advising caution, emphasizing the risks associated with excessive leverage during periods of heightened uncertainty [1].
CONCLUSION
The AI-driven rally has brought both gains and heightened volatility to Japanese, South Korean, and Taiwanese equities, fueled by increased leverage among retail investors. Market participants warn that unless leverage is curbed, volatility may persist, and caution is advised amid ongoing uncertainty.