JPMorgan: After KOSPI Plummeted 40%, Deleveraging Nears End, Valuation Enters Repair Window

TechFlow news, according to TechFlow Research, JPMorgan Chase's July 29 research report pointed out that the South Korea KOSPI index has fallen nearly 40% since its high on June 22, leveraged ETF scale shrank from $50 billion to $17 billion, hedge fund long-short ratio dropped from 5.7 times to 3.2 times, and deleveraging progress has exceeded 90%. KOSPI forward P/E ratio fell to 5 times, at crisis levels. Foreign capital cumulative net sales exceeded $110 billion, but 90% was concentrated in two storage chip giants; as their weight in the MSCI Emerging Markets Index dropped from 9.5% and 8.3% to 6.5% and 4.5%, passive selling pressure has significantly eased. JPMorgan believes that with position clearing combined with cheap valuation, the South Korea stock market has entered a valuation repair window, and is bullish on wealth effect-related sectors, biopharmaceuticals, preferred stocks, and bank stocks.