degentrading
Former TradFi Options Market Maker, Delegate at Lido DAO
Korean equities look near a bottom as retail investors who levered long at the KOSPI top now short it at the lows. After new rules effective July 31 raised the minimum deposit for single-stock leveraged ETFs to ₩30M, retail net-sold over ₩1 trillion of single-stock leverage on day one, led by SK hynix and Samsung products, and bought about ₩500bn of index inverse ETFs instead, led by a 2x KOSPI inverse fund. x.com x.com
Korean equities' 17.91% rebound looks higher quality because foreigners and institutions absorbed heavy retail selling as leveraged ETF trading collapsed. Foreigners bought over KRW 7 trillion of stocks, about 75% in SK hynix, Samsung Electronics and related names, but barely any index futures, signaling real rebuilding. Retail sold KRW 8.25 trillion, shifting from leveraged dip-buying to cutting risk. Under new rules, single-stock leveraged ETF turnover fell from KRW 12.4tn to 3tn. x.com
South Korea's finance ministry moving to stabilize the stock market and restrict leveraged ETF trading could mark an interim bottom in the KOSPI. x.com
Retail leverage and AI concentration have fueled the Korean equities rout. The KOSPI fell more than 14% in a week, its worst weekly decline since 2008. Korean equities will fall further if the rout in SK hynix and Samsung continues, though some dip buyers may already be lining up. x.com x.com
Korean equities are seeing smart money buy a retail panic at the bottom. Local retail investors hit by margin calls dumped a record 8.2 trillion won, while foreign institutions bought a record 7.2 trillion won in a single day. x.com
Korean equities have a central role in the AI trade because Samsung and SK hynix supply most of the memory it needs. Despite the shakeout, the KOSPI leads the major markets shown at roughly +36% this year. The bullish lean faces a flow warning: Korean semiconductor ETF 20-day flows fell from nearly +$4B in June to about -$703M by October 18 as the index approaches rising support. x.com x.com x.com x.com x.com
Korea's KOSPI is dangerously concentrated, with Samsung and SK hynix making up 54% of the index, and a 90% rise in six months looks like euphoria and a top. Per @epictrades1, citing Korea's Financial Supervisory Service, over 1.2 million leveraged retail accounts faced margin calls by July 13, and roughly 320,000-360,000 were forcibly liquidated. Index dominance by so few stocks works until it doesn't, and latecomers become exit liquidity. x.com x.com x.com x.com
The South Korean president's alarming appeal amid the KOSPI selloff aligns with a market bottom, not a top. The KOSPI is deep in Wave C, and its pain looks nearly over. x.com
Korean equities' year-to-date rally is getting more fuel, as Interactive Brokers adds access to Korean stocks and Korea approves leveraged ETFs for the first time. x.com x.com
Korean equities face a leveraged-retail liquidation that is getting out of control. Per @fintergirl, young Koreans priced out of Seoul apartments are buying the KOSPI with 5x portfolio margin and 2x single-stock ETFs; 360,000 accounts have been liquidated, 62% of them held by under-35s, and KOSPI margin loans hit a record 38.63 trillion won at end-June. Retail losses on borrowed money reached 2.15 trillion won in a month, with more liquidation likely. SK hynix is already back to April levels. … Show more
Korean equities' July leverage-driven flush increasingly looks like exhaustion, not a failed AI thesis. The KOSPI rose 3.56% to 6,813, back in bull-market territory more than 20% above its July low, with Samsung up over 5% and SK hynix nearly 8% on reported sovereign-wealth interest and reaccelerating global AI capex. Korean semiconductor exports are running up 155% year over year in early August. x.com
