US Investment Shifts from AI Stocks to Traditional Stocks, Risks of Lee Jae-myung's 'Stock Market Empire' Predatory Personal Loans
As US investors shift from AI technology stocks to less volatile and safer traditional stocks, the vulnerability of the Lee Jae-myung administration's "stock market empire" is being exposed by the surge in the stock market, which relies on expanding personal loans.
The Lee Jae-myung administration has fostered a sharp rebound in the stock market in the second half of the year, with the KOSPI 5000 market being the largest market for individual investors, a strategy that maximizes margin trading in a market that does not require collateral.
Furthermore, the risk-free market strategy of foreign investors, backed by individual investors who have exceeded 30 trillion won in margin trading in the short term, has led to repeated selling, increasing the risk of a sharp decline.
The New York Times reported on the 7th in a joint article by three reporters specializing in financial funds and Silicon Valley technology companies, that “as investors reduce their exposure to speculative bets like Bitcoin and artificial intelligence stocks, they are moving into previously unpopular sectors that are seen as better protected during volatility.”
They added, “Energy stocks, consumer goods, and materials have all risen more than 10% this year, while the technology sector has slumped.” The NYT continued, “Another sector vulnerable to AI is ‘software as a service’ (SaaS) providers, which provide subscription-based computer programs over the internet rather than installing them on a computer.
The new free software models from AI companies have the potential to replace not only SaaS business models but also much of the labor behind them.”
The New York Times reported on the "free AI launch" on the 3rd, which triggered a plunge in tech stocks, saying, "Because Anthropic's 'open source' is built on software, any company can download it without paying, and these plugins could replace the tools companies currently sell to businesses, dealing a fatal blow to the expected profits of expensive existing AI companies."
Wall Street analysts have begun calling the widespread sell-off in tech stocks due to "free expansion" the "SaaSpocalypse."
"After years of technology-led market leadership, the balance of power is shifting as investors shift to traditional 'old economy' sectors," Angelo Kurkapas, a strategist at fund manager Edward Jones, told the Times.
On the 6th, Lee Han-joo, a special advisor to the president regarding the KOSPI's surge, stated, "I hope it reaches close to 7,000 before this administration ends, and there's a good chance it will."
He added, "There's a possibility that real estate productivity will decline relative to other sectors, so a natural transition period (centered on stocks) will occur under this administration." He added, "Corporate productivity will increase and be reflected in stock prices."
The special advisor stated that maintaining the strengthening system for the surge in stock prices is necessary, adding, "Real estate yields need to be gradually reduced."
Regarding apartment prices in Gangnam, Seoul, he stated, "They are risky assets that can plummet at any time," and, "Gangnam house prices are no longer stable assets. Because prices have risen significantly, they are risky assets with uncertainties about how far they could fall if they begin to decline. I cannot agree with the idea of purchasing real estate in pursuit of stability."
Foreign investors net sold over 5 trillion won worth of Korean stocks on the 5th and 3.4 trillion won on the 6th. Short-term debt investments, which eliminate the need for banks and increase the risk for individuals, increased securities firm receivables, reaching 1.021 trillion won as of the end of January, a surge of 8.47% in just one month.
This led to a "stock market plunder" strategy, where individuals were directly exposed to high-risk bets, even bearing the risk of foreign investors. This left institutional investors profiting and suppressing individuals.
Unlike bank loans, margin transactions in the stock market are not recorded as "debt," posing the highest risk exposure. On Wall Street, private finance companies expanded margin loans to tech companies to avoid exposure, calling these secret investors "agents" and using them as a means of evasion on their balance sheets.
From the beginning of his presidential campaign, this president abused the KOSPI 5000 election pledge by saying, “The stock market is the heart of capitalism,” and from the beginning, he accelerated his strategy of expanding stock market debt investment by accounting for securities company credit loans, which are easier than bank collateral loans, based on a method of expanding the debt of technology companies without recording Korean individuals on their balance sheets, and building a “stock market empire.”
The Korean stock market, with its dependence on US technology stocks by conglomerates like Samsung and SK, has solidified into a "guaranteed high return without loss" strategy, where foreigners sell, reap high returns, then buy back to drive prices up, only to sell again to drive prices down again, securing profits from further increases and benefiting from exchange rates.
The KOSPI 5000 strategy has solidified. The government has expanded ultra-low-interest financial support to conglomerates, while individuals have strengthened their investment in margin stocks, which incur two to three times the losses in a downturn.
Under Lee Jae-myung's administration, the stock market has been supported by record-breaking net buying by individual domestic investors, fueled by foreign profit taking. Margin loans exceeded 30 trillion won in late January, creating a "highest personal debt risk economy," contributing to the rise of foreign investors. This has created a pyramid structure that sustains the presidential system, with the link being the "expectation of rising stock prices."
Following President Trump's announcement of a 25% tariff hike last month, this president, by posting late-night posts twice a day, created a fear of real estate, hindering financial lending and driving foreign investors to resort to margin loans from securities firms. This strategy of "guaranteeing capital injection into the Korean stock market" was driven by a debt economy driven by expanded margin trading by individual investors, encouraging foreign investors to profit from Korean stocks.
This president's strategy of imperializing the stock market through the rapid rebound of KOSPI has excluded foreigners and black market investors from the rapidly fluctuating Korean stock market, and as a result, exposed KOSPI to the world's most extreme fluctuations. In addition, he attempted to expand personal credit loans from securities companies excluded from the foreign exchange market and finance from the beginning, placing them at the center of the system, and used psychological warfare to create real estate enemies by blocking stabilization devices. It also appears to have provided extreme high-risk leverage to foreigners by making individual citizens.
Under Lee Jae-myung's KOSPI 5000, the core of his individual debt expansion strategy—the rise of US tech and AI stocks—and the US interest rate cuts, were competitively reported by securities firms, the beneficiaries of Korea's debt expansion strategy. As margin trading expanded and became a central national policy, foreign investors secured a stock market free from losses due to the rising exchange rate, creating a short-term surge in technology-focused Korean stocks.
This was followed by a sharp decline in foreign selling, confirming the system's even greater gains. In the "stock empire system," pension funds, including the National Pension Service, are subordinated to foreign investment returns, reaping small profits.
This contributes to the Lee Jae-myung administration's expansion of power. Foreign investors, along with institutional investors, are joining the sell-off, placing the ultimate risk of loss on individual credit, exposing the system to the threat of collapse and undermining political identity.
The Lee Jae-myung administration adopted a strategy of rapidly increasing the proportion of foreign investment in the stock market from the low 30% to 37%. Foreign investors, under the 5000-point index system guaranteed by the president and the government, can profit from the market's plunge without the risk of loss. This has made the KOSPI the world's only guaranteed return market.
President Lee Jae-myung, in his ignorance of the Korean stock market's volatile fluctuations, elevates foreign investors to the "absolute market class" of "foreigners and black-rock." As a result, the KOSPI appears to have been exposed to the world's most volatile market. Regarding the stock market, President Lee stated at a Cabinet meeting on the 2nd, "Some people like it," and added, "When the social environment improves, celebrating, encouraging, and joining forces is the foundation of a community."
He removed foreigners, who control one-third of the Korean stock market, which is supported by foreign investment, from the "community," and declared their "stock sales" within the "KOSPI 5000 community" a "public enemy" in Korean politics.
President Lee, in collaboration with Black Rock, the largest US private equity fund and a co-partner in the KOSPI 5000 rebound strategy, viewed foreign investors as "co-partners." He also created an ideological framework to assume that foreign investors would not engage in a massive sell-off in the Korean stock market, and he directly demonstrated this with an executive order.
The New York Times reported, “Wall Street saw a slump this week as investors recognized the looming threat of artificial intelligence replacing businesses. While the prospect of AI disruption has weighed on the economy for years, a new set of tools unveiled this week by a San Francisco startup has sparked a sudden reckoning on Wall Street.”
Software companies were hit hardest by these new tools, which exposed the limitations of tech stocks, and the biggest hit went to investment funds that provided loans to tech stocks.
The New York Times reported, “The stock market sell-off also weighed on broad market indicators, but the S&P 500 rebounded on the 4th, rising about 1.8% by mid-afternoon. However, the rally alone wasn’t enough to completely erase the weekly losses in software stocks and private credit companies that had been battered throughout the week.”
The Times added, “Artificial intelligence has been like rocket fuel for stocks, propelling them to record highs in recent years. But since October, enthusiasm has gradually waned as the reality of this revolutionary technology has slowly sunk in.”
Investors are not only concerned that AI could make certain businesses obsolete, but are also questioning the piles of money tech companies are pouring into it.
On the 3rd of last week, which triggered a decline in U.S. tech stocks, investors were shocked when Amazon announced plans to invest $200 billion in AI and other large-scale investments this year.
The New York Times reported, "This figure exceeded analysts' expectations by $50 billion," and the stock fell more than 7% on the 4th.
This week, Google's parent company, Alphabet, said it would spend up to $185 billion this year, and last week, Mehta said capital expenditures for AI support could reach $135 billion.
The software shock was the catalyst for this week's sell-off, which the New York Times attributed to the San Francisco-based AI company Anthropic's release on the 3rd of last week of free plug-in software tools that can automate functions like customer support and legal services.
Because Anthropic's "open source" software is built on software, any company can download it without paying, and these plug-ins could replace the tools companies currently sell to businesses, raising questions about the projected profits of expensive, established AI companies.
OpenAI CEO Sam Altman virtually acknowledged the "free expansion" in an interview with the technology-focused streaming program "TBPN" on the afternoon of the 5th, saying, "There have been several large-scale sell-offs in these SaaS stocks over the past few years as these software models have been released," and "I expect there will be more."
TBPN (Technology Business Programming Network) is an online media outlet that sponsors Day Jobs, partnering with startups and publicly traded companies, and is used by AI company executives for promotional purposes.
Analysts have begun calling this widespread selloff in tech stocks the "SaaSpocalypse."
Stocks of companies that provide legal services and research to tech companies, such as LegalZoom, LexisNexis, and Thomson Reuters, have fallen by up to 20% over the past week, with mixed results in recent days.
Shares of Salesforce, which produces SaaS and customer relationship management software for sales workers, have fallen 25% over the past month.
Even art-related companies have been hit by the monthly decline.
The New York Times reported that "shares of Adobe and Figma, which make artist tools, have fallen 9% and 17%, respectively, over the past week, reflecting concerns that key design tools for creative workers could eventually be automated." The recent surge in AI spending hasn't just impacted the software industry.
The surge in AI spending has also driven a surge in demand for random access memory (RAM), a type of chip needed to produce the AI hardware these companies build. On the 4th, Qualcomm, which manufactures microprocessors for smartphones and computers that require RAM, said it faces uncertainty about how much demand for its chips will be over the next two years.
This followed a decline in Qualcomm's stock price of about 20% this year.
The New York Times attributed the decline in Qualcomm's stock price to concerns that soaring memory prices could dampen consumer demand for new products.
Regarding credit transactions, the most risky sector in the stock market, the Times stated, "Software companies have become favored targets for private credit lenders because their subscription-based business models provide a stable source of revenue that allows them to take on more debt.
Private credit transactions, as the name suggests, are not public, and loans held by business development companies (BDCs) are often seen as 'agents' for the industry." Citing Barclays analysts, the New York Times reported, “About half of BDCs’ software debt, or about $45 billion, is due after 2030, raising concerns about how long it will take to repay these loans. The longer it takes borrowers to repay their loans, the more time they have to default, and in that case, the longer their businesses will be replaced by AI.” The report extended the profit structure concealment.
VanEck’s exchange-traded fund, which holds holdings in major BDCs, is down about 5% this year and more than 20% over the past 12 months.
Despite the results released this week by Ares Management and Blue Owl Capital—two large private credit firms widely applauded by Wall Street analysts—the two companies haven’t been immune to investor concerns about AI innovation.
Ares shares are down more than 20% this year, and Blue Owl’s are down more than 16%. In an analyst call on the 5th, Blue Owl co-CEO Mark Lipschultz strongly denied that AI poses a threat to the lending business.
"We have no warning signs, and in fact, no yellow flags," he said. "In fact, we have mostly positive signals."
Blue Owl's Chief Financial Officer, Alan Kirschenbaum, attributed the company's struggles to "backlash from private credit, AI software," and investors seeking to get some of their money back.
Analysts found little to worry about in the company's earnings results.
"If you take the name off the top of the release and go into the details, I'd say it was a pretty good quarter," Evercore ISI analyst Glenn Shore wrote in a note on the 5th morning.
Bitcoin, a retail-focused market that fluctuates with popular stocks, also fell, falling to $60,000, its lowest point since October 2024, before rising back to $70,000.
Regarding this, the NYT said, “Investors are reducing their exposure to speculative bets such as Bitcoin and artificial intelligence stocks, and moving into previously unpopular sectors that are seen as better protected in times of volatility.” “Energy stocks, consumer goods, and materials sectors have all risen by more than 10% this year, while technology sectors have stagnated.”
See <Lee Jae-myung's Stock Market Plunge: 'Foreign Black Rock Ruling Class', KOSPI's World's Largest Fluctuation, February 6, 2026>
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