Francis Hunt
Trading Education, Hunt Volatility Funnel & Capital Preservation
Korean equities look exposed because the won's collapse is part of the AI crisis, even as many investors have recently become interested in the KOSPI and SK Hynix. Per @GlobalMktObserv, foreign investors have sold KOSPI stocks for nine straight sessions, with $3.4 billion of outflows in one day concentrated in tech, and year-to-date foreign outflows near a record $55 billion, bought by domestic retail investors. x.comÂ
Long-dated Treasuries, Korean equities, the Nasdaq 100 and high-yield credit are set to fall as the credit crunch in private credit and commercial property starts to bite. Supply-chain throttling via the Strait of Hormuz will add inflation on top of recession, spiking rates and driving down debt values. x.comÂ
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.comÂ
Korean equities' bigger picture is concerning because breadth has collapsed, with the KOSPI held up only by two stocks that make up half the index. The KOSDAQ has erased all its gains since April 2025 and trades near six-year lows, while the KOSPI is down 46% in six weeks after twice testing its 200-day average. A short-term bounce of about 20% to fill this week's gap is possible. x.comÂ
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.comÂ
Korean equities are correcting like an altcoin after moving like one, going from euphoria to a bear market in barely a month. A rush of new investors, leverage and AI-chip hype drove the KOSPI up too fast, and much of the drop is that excess being flushed out, with war fears and rising oil adding pressure. x.comÂ
Korean equities are in trouble when accounts that never followed the KOSPI until a month or so ago start posting about it. x.comÂ
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.comÂ
South Korean stocks are losing market confidence as foreign investors keep selling. The KOSPI fell as much as 5% in a day, triggering a 5-minute halt on program selling, with SK hynix down more than 8% and Samsung nearly 6%. Foreigners have sold since July 28 while retail investors bought every dip. The pause can slow the selling but can't restore confidence. x.comÂ
Korean stocks face a leverage-driven crash, as more than $30 billion in daily-rebalancing leveraged products tied to Samsung and SK Hynix are forced to sell as prices fall. The two dominate the KOSPI, which has already fallen 25% in a month, and forced selling is feeding more forced selling. Korea has warned first before: its 1997 currency collapse, its chip stocks topping ahead of the 2000 Nasdaq crash and its 2008 breakdown before Lehman. x.comÂ
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.comÂ
South Korean equities look like a bubble about to burst because the KOSPI's 3.5x rise in 12 months, from 2,500 to above 8,500, rests on just two companies, Samsung and SK hynix. An index that concentrated is a trade, not a market, and parabolic trades like this break hard. x.comÂ
