The severity in South Korea is no less than that of Chinese stocks (it hasn’t broken below May’s low)—opportunities only arise when everyone has given up, and the timeline may be longer than you imagine. South Korea’s deleveraging closely mirrors that of A-shares; the sharp rally after May was fueled entirely by leverage. To fully purge this leverage, prices will likely fall below the level where the May rally began.

Leverage reduction (increasing margin) and interest rate hikes both reduce liquidity in the Korean market.

A market that kills leverage looks like this. It features extremely high volatility and moves with incredible speed—rapid, back-to-back moves that catch all leveraged traders off guard, leaving them no time to react. I’m very familiar with this, given my background in crypto. I know you’re eager, but don’t rush—because it’s about to get faster. Once leverage is fully liquidated and the downtrend completes its pattern, a strong rebound is highly likely. $MU and $SNDK are both forming similar structures—picture a simple zigzag: We’re currently in the fifth wave of the first downtrend, followed by a three-wave rebound. When everyone thinks the bull is returning, another five-wave decline will wipe out everyone again. If it doesn’t stay a simple zigzag and evolves into a double zigzag or something more complex, the correction level would be excessive—and brutal. Because if that happened, the depth and duration would qualify as a full bear market, which we don’t yet see. So don’t panic. Think of the first correction phase as nearing its end. Over the next one to two weeks, stay closely watchful—you’ll likely get a strong entry opportunity soon.

South Korea has been hit hard by leverage—retail investors have been wiped out, left contemplating life on the rooftop... Today, the CEOs of South Korea’s top 10 asset management firms met and proactively proposed strict regulations on single-stock leveraged ETFs: 1. Raise the minimum deposit threshold—from the current 10 million KRW (approximately $6,714 USD). 2. Spread out daily rebalancing times to reduce the market impact of forced buying and selling. In June, single-stock leveraged ETFs (primarily 2x Samsung Electronics and SK Hynix) were just approved, yet eight asset managers quickly launched 16 such products, pushing total assets under management to $3 billion. Young retail investors flooded in, treating them like slot machines and placing massive bets. What happened? Prices plunged over 60% from their peaks, nearly halving since listing. More than 30 trillion KRW in assets evaporated, and 1.2 million accounts were liquidated. Leveraged ETFs now account for over 70% of trading volume on the Korean stock market—SK Hynix even experienced a single-day drop of 15%, triggering multiple circuit breakers. Now, conservative lawmaker Ahn Cheol-soo has bluntly declared: “This is a policy failure—KOSPI has become a casino.” On Thursday, July 17, South Korea’s four major government agencies held their first official meeting to formally address the impact of single-stock leveraged ETFs on the broader market.