South Korea's KOSPI index has fallen ~40% from June peak into oversold territory, with leveraged ETFs liquidating across the market.
Macro & Markets ·
South Korea's KOSPI index has declined roughly 40% from its June 22 peak, with the index now trading at oversold levels according to relative strength index readings. Forward price-to-earnings and price-to-free-cash-flow multiples have both compressed to approximately 5x. The sharp pullback has forced widespread deleveraging, with most leveraged ETFs in the Korean market liquidated during the five-week decline.
The repricing has exposed how leverage and crowding can distort even fundamentally sound equities. The country's major technology companies—which supply critical components for global artificial intelligence infrastructure—have maintained their structural importance despite the drawdown, though the correction has eliminated the overbought conditions that preceded it. Margin pressures have not materialized everywhere; larger technology operators have demonstrated ability to sustain profitability while sustaining substantial capital expenditure.
What remains unclear is whether the current oversold conditions represent a durable bottom or merely a necessary precondition for recovery. The concentrated exposure of global AI buildout to South Korean manufacturing capacity underscores the geopolitical dimension of the selloff, yet the material shift in valuation alone does not confirm a reversal without broader market confirmation.