Korean Deleveraging Nears End as Foreign Investors Buy Dip in Chip Stocks

Foreign capital reverses trend with record $50B net buy in Korean chips. Leveraged ETF AUM drops to $17B, signaling deleveraging completion despite ongoing volatility.

Woofun AI reports that foreign institutions are reversing their selling stance in the South Korean market, executing a record single-day net purchase of approximately 72 trillion Korean won ($50 billion) in chip stocks. This influx marks the end of a year-long net selling trend and coincides with the conclusion of a significant deleveraging cycle.

Data indicates that assets under management in leveraged ETFs targeting Samsung Electronics and SK Hynix have contracted from roughly $50 billion in late June to about $17 billion last week. Analysts note that this decline reflects fund liquidation rather than fundamental deterioration. JPMorgan Chase estimates that hedge fund deleveraging has reached approximately 90%, with average short positions falling from a peak of 5.3% to 4.3%. Despite the rebound, the KOSPI index exhibited sharp volatility, rising 17.9% before dropping nearly 5%. The South Korean government has begun restricting high-leverage products following retail investor losses.