TechFlow news, July 22: South Korea's stock market surged on Wednesday, as pressure from unwinding leveraged positions, which previously drove the benchmark index down nearly 30% from its peak, appears to be nearing an end. This rebound alleviated pressure from selling in previous weeks, a selling spree that caused the market to erase about $1.2 trillion in market capitalization since its June high.
Market participants stated that this plunge was mainly driven by the unwinding of leveraged exchange-traded funds (ETFs), a contraction in retail margin loan sizes, and heightened concerns over the sustainability of the memory chip boom. Strategists at JPMorgan, including Mixo Das, said in a report that the deleveraging process of leveraged ETF holdings appears to be about 75% complete.
According to data from the Korea Financial Investment Association, as of July 16, South Korean investors have cut leveraged stock positions to the lowest level in three months. The margin balance fell to 33.4 trillion won ($22.6 billion), down 13% from the peak at the end of June. For many investors, this is seen as a clear signal of market improvement. (Jin10)
