Korean stock market surges as leverage unwinding nears completion

Huo Xing Finance reports that on July 22, according to market data, South Korea’s stock market surged sharply on Wednesday, with the KOSPI index breaking above 7,100 points, rising over 5.6%. Samsung Electronics rose more than 6%, and SK Hynix climbed over 7%. The leveraged trading liquidation pressure that previously drove the benchmark index down nearly 30% from its peak appears to be nearing its end; this rebound has eased the selling pressure accumulated over recent weeks, during which South Korean equities lost approximately $1.2 trillion in market value since their June high. J.P. Morgan strategists, including Mixo Das, noted that the deleveraging process for South Korean leveraged ETFs appears to be about 75% complete. According to data from the Korea Financial Investment Association, as of July 16, Korean investors had reduced their leveraged equity positions to the lowest level in three months. Margin debt fell to 33.4 trillion Korean won ($22.6 billion), a 13% decline from the peak at the end of June. For many investors, this is seen as a clear signal of market improvement.