The week the AI trade cut both ways

1. 01

   The best performing market in the world fell 40% in a month

   Korea's KOSPI fell hard enough on Tuesday to stop the market altogether, and after another 6% on Wednesday it sat close to 40% below a peak it had set barely a month earlier. Retail investors laid funeral wreaths outside the National Assembly.

   The fall tripped a circuit breaker. When the index hit minus 8% on Tuesday morning the Korea Exchange halted trading for twenty minutes, then reopened through a call auction. Samsung Electronics was down 9.4% at that point and SK Hynix 11%. It was the eighth time a circuit breaker has fired in 2026 alone, and only the fourteenth on record, which tells you more about this year than any single percentage does.

   Worth separating two things people run together. The halt was automatic, an exchange rule that triggers on a set percentage drop, not a government decision. The government acted the following evening, when the finance minister called an emergency meeting with the central bank and both financial regulators and announced curbs on retail access to leveraged funds.

   The damage came from a product that barely existed a year ago. Single-stock leveraged ETFs let ordinary savers bet on one company at twice its daily move, and Korean investors poured into them chasing Samsung Electronics and SK Hynix through the AI boom. The KODEX SK Hynix Single Stock Leverage ETF is down more than 80% from its June 23 peak.

   Citi estimates retail investors lost around $38.7 billion on these products in a single month. The leveraged ETF market shrank from $52.5 billion on 22 June to $19 billion a month later.

   About 30 funeral wreaths were laid outside the National Assembly in Seoul by an investor group calling for the products to be scrapped. Deputy Prime Minister Koo Yun-cheol apologised for approving them, saying officials had not fully considered how they would behave once they launched. Individual holdings are now capped at 20% of a portfolio.

   The part that is hardest to hold in your head: even after a 40% collapse, the KOSPI is still up 41.5% for the year in dollar terms. It remains the best performing major market in the world.

2. 02

   A 24-year-old was up 439%, then the same thing happened to him

   Leopold Aschenbrenner's fund returned 439% in the first half of the year, then AI and chip stocks fell and the borrowed money worked in reverse. It is the Korean story again, at one desk instead of a whole country.

   Aschenbrenner is a former OpenAI researcher who graduated from Columbia as valedictorian in 2021. He published an essay called Situational Awareness in June 2024, then raised a fund under the same name, backed by investors including Patrick and John Collison, Daniel Gross and Nat Friedman.

   The Financial Times reported a 439% net return for the first half of 2026, taken from an investor letter dated 24 July. Six days later the fund was selling.

   He sold most of the public stock portfolio to Ken Griffin's Citadel. The reported size of the fund tells the story in three numbers from three outlets: around $45 billion at the peak, roughly $20 billion in recent months, about $10 billion after the sale.

   The mechanism is identical to Korea's, just with more zeros. Leverage does not change whether you are right. It changes how long you are allowed to be wrong.

3. 03

   Microsoft had the best single day any company has ever had

   It added close to $450 billion of market value in one session, the largest one-day gain in the history of the US market. The same AI story that just wrecked Korea gave Microsoft its best week since 2000.

   The trigger was Azure. Microsoft's cloud business grew 43% in the quarter, its fastest since early 2022, and the company guided to 45% for the next one against expectations closer to 41%.

   That took its total market value to roughly $3.35 trillion in a single afternoon.

   It is worth sitting with the pairing. In the same week, the same underlying AI trade produced the biggest one-day gain in US market history and one of the worst months in Korean market history. Being right about a trend and surviving it are two different problems.

4. 04

   Apple had a fine quarter and fell 7%

   Amazon beat expectations and rose 17% on the week. Apple missed on services and China revenue and fell 7.2%. Results are not judged on their own, but against what the market already expected.

   Apple's quarter was not bad. It simply was not what had already been priced in, and the gap between those two things is where the share price actually lives.

   This is the single most useful idea for anyone starting out, so we wrote a whole piece on it: Why good news can crash a stock.

5. 05

   A company with $12 million in cash and $9 billion in debt

   First Brands, an auto parts maker brought down by an alleged $2.3 billion fraud, went to court this week to claw back $2 billion for its creditors. The market does not believe it will work.

   First Brands filed for bankruptcy in September 2025. When it did, it declared about $12 million in cash against more than $9 billion in liabilities.

   US prosecutors have charged executives with a multibillion-dollar fraud centred on factoring, which is the ordinary practice of selling your unpaid invoices to someone else for cash up front. The allegation is that the same invoices were sold more than once.

   On 28 July the company sought court approval for a plan to sue insiders and business partners and recover $2 billion. Its $1.1 billion rescue loan currently changes hands at around 16 cents on the dollar, which is the market's way of saying it does not expect that money back.

6. 06

   Brent crude pushed towards $90 on Hormuz tension

   Renewed tension around the Strait of Hormuz pushed Brent near $90 a barrel. It is the clearest chain in markets: a shipping lane moves oil, which moves transport and food costs, which moves inflation, which moves rates.

   The Strait of Hormuz is a narrow channel between Iran and Oman that a large share of the world's seaborne oil has to pass through. It is the reason a regional dispute turns into a global price.

   Brent finished the week near $90 a barrel, with West Texas Intermediate near $85.

   That chain is worth memorising, because it runs in both directions and it ends up touching plenty of things that have nothing to do with oil.

Figures cover the week ending 2 August 2026 and are sourced from public reporting. Educational content, not financial advice. A new recap goes up every week, and on @wealthstratum.