The Bank of Korea has warned that the rapid growth of highly leveraged investments linked to artificial intelligence and South Korea’s leading semiconductor companies could amplify market volatility and transmit financial shocks across borders.
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In its September 2026 Monetary and Credit Policy Report, the South Korean central bank raised concerns over the sharp increase in leveraged exchange-traded funds and overseas derivatives tied particularly to Samsung Electronics and SK Hynix, two of the world’s major suppliers of memory chips used in artificial intelligence data centres.
The warning comes amid a global rush to invest in AI-related infrastructure, which has driven substantial capital into semiconductor companies considered critical to the expansion of data centres and generative AI systems.
According to the report, the growing use of leveraged investment products means relatively small movements in the underlying shares can produce disproportionately large gains or losses for investors, increasing the risk of abrupt market corrections.
The Bank of Korea also drew attention to the rapid expansion of foreign-listed financial products tracking South Korean technology companies. Trading in some overseas derivatives, including leveraged ETFs listed in markets such as Hong Kong, reportedly increased more than 20-fold during the first half of 2026.
The central bank warned that such cross-border exposure could create additional channels through which foreign liquidations and automated trading could quickly affect liquidity and share prices in South Korea.
The heightened speculation has coincided with significant volatility in the South Korean stock market. The benchmark KOSPI experienced a sharp rally earlier in the year before suffering a substantial correction as leveraged positions were unwound.
The Bank of Korea said the risks extend beyond stock-market volatility to the sustainability of the wider global AI investment boom.
It projected that growth in global capital expenditure on artificial intelligence infrastructure could peak in 2026 before slowing significantly in 2027.
The central bank warned that if revenues generated from AI services fail to keep pace with the enormous sums being spent by technology companies on data centres, processors and related infrastructure, investor expectations could be sharply revised.
Such a slowdown, it said, could expose highly leveraged investors and lenders to significant losses and increase stress throughout financial markets.
The report identified uncertainty surrounding the profitability of artificial intelligence investments as one of the major vulnerabilities confronting the sector.
Technology companies have committed enormous sums to AI infrastructure, but questions remain over how quickly those investments can generate sufficient revenues to justify current valuations and spending levels.
Another area of concern is the growing use of external financing and vendor-financing arrangements to support AI expansion.
The Bank of Korea cautioned that aggressive financing structures could concentrate credit risks among semiconductor manufacturers, technology companies and financial institutions if demand weakens unexpectedly.
Cross-border contagion was also identified as a significant risk, particularly where international hedge funds and other investors hold large leveraged positions through derivatives linked to South Korean companies.
A rapid sell-off abroad could therefore generate immediate pressure on domestic markets even when the initial shock originates outside South Korea.
The central bank’s warning reflects growing concern among global policymakers over whether the extraordinary pace of AI investment can be sustained without creating financial imbalances similar to those experienced during previous technology investment cycles.
While the Bank of Korea did not suggest that investment in artificial intelligence itself poses a threat, it warned that excessive leverage, concentrated exposure and complex derivatives could magnify losses if market sentiment turns suddenly.
Regulators are consequently being urged to strengthen oversight of overseas derivative products and closely monitor leveraged positions tied to major domestic technology companies.
The central bank said stronger surveillance of cross-border financial products would be necessary to limit the risk that rapid, automated liquidations could destabilise domestic markets.
The warning comes as Samsung Electronics and SK Hynix remain central to the global AI supply chain because of strong demand for advanced memory chips required by data centres and artificial intelligence systems.
Their growing importance has attracted international capital, but the Bank of Korea cautioned that excessive concentration of investment around a small number of AI-related companies could also leave markets vulnerable if expectations surrounding the technology weaken.
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