Margin Call Shock and Chip Sector: Tom Lee Predicts Market Rebound

Global equity markets have been rattled by a margin call wave and “one‑click liquidity,” yet Tom Lee sees an imminent rebound on the horizon.

The Chip Sector’s Downward Surge

Chip firms led the pullback, leaving the S&P 500 down 1.6% for the week and the Nasdaq off 2.9%. The trigger was a Chinese artificial intelligence model that cast doubt on the massive spending plans of major cloud providers.

Historic Rise in Margin Debt

■Margin debt surged 54% year‑over‑year, marking the sixth‑largest increase in the past 60 years.

■1.2 million Korean brokerage accounts received margin calls, representing roughly 10% of all accounts in the country.

■The 27% plunge in the Kospi index sparked ripple effects across global markets.

Turbulence in the Korean Market

South Korea’s chip giants SK Hynix and Samsung rode the tech wave to a frenzy of buying, only to see leveraged ETFs amplify the rally. The subsequent unwind drove the Kospi down 27%, pushing it firmly into bear‑market territory.

Global Spillovers and US Indexes

■The S&P 500’s 2% dip appears modest compared with the Korean crash, acting more like a "speed bump."

■The Nasdaq slipped 6%, underscoring lingering volatility in technology‑heavy stocks.

■Lee argues the pullback cleanses speculation ahead of upcoming earnings reports, setting the stage for a healthier market.

Markets have become more fragile due to heightened leverage and soaring margin debt. Nevertheless, the underlying long‑term trends remain robust, and technology and chip firms are poised for a recovery by the end of 2026. Investors should tighten risk controls and steer clear of leveraged products to support a sustainable upside.