Korea Market Volatility Eases as Leveraged Bets Unwind
What Happened
South Korea experienced a historic market selloff that forced many leveraged investors to unwind positions, reducing margin debt and speculative trading. Regulators imposed stricter rules on single-stock leveraged ETFs tied to major chipmakers such as Samsung Electronics and SK Hynix, leading to a sharp decline in trading volumes. The Korean volatility index, which had surged to record highs in June, has since fallen to its lowest level in about two months.
Key Takeaways
Forced deleveraging has stabilized markets, but foreign investors remain cautious despite attractive valuations and strong corporate earnings prospects.