KOSPI 5,680... drops another 5%

It clearly shows that stocks are a risky asset. With the index down -35% from its peak, if you fail to read the market's up and down movements properly, you will lose money and lose your mental health. Rather than betting, we should endure well until the next bull market with a risk management mindset.

The beauty of leveraged ETFs is that they tend to forcibly buy more or sell more around 30 minutes before the market close to align with the 2x profit/loss. Just as they rise twofold during an uptrend even when there is no reason to make money, during a decline, they just fall even if there is no reason to drop that much...

Global funds are selling Korean stocks to close out their short positions in Hong Kong tech stocks, rapidly unwinding the overcrowded inter-regional pairs trade. According to data, the 20-day moving correlation between the Kospi index and the Hang Seng Tech index has returned to a negative (-) direction. This shows that the investment trend from earlier this year—shorting the Hong Kong stock market and going long on large-cap Korean semiconductor stocks—has flipped completely in the opposite direction.

🔄 Short Covering and Capital Movement Mechanism
Previous Strategy: Global capital shorted undervalued Hong Kong big tech companies and used those funds to aggressively buy (Long) leading Korean AI memory companies with leverage.
Current Change: Capital is flowing out of Korea's hardware sector to purchase Hong Kong stocks and cover existing short positions (Short Covering).
Affected Companies: Korean semiconductor companies like Samsung Electronics and SK Hynix face selling pressure, while Hong Kong tech stocks like Alibaba and Tencent are rebounding due to short covering inflows.

📉 Key Catalysts Driving Capital Movement
Tech Overcrowding and Valuation Burden: As the Kospi index fell -35% from its peak and entered a technical correction phase, investors began re-evaluating excessively high AI valuations.
Leverage Unwinding: Since margin balances had reached an all-time high due to the launch of single-stock leveraged ETFs in the Korean market, increased intraday volatility triggered panic forced liquidations and margin unwinding.
Valuation Arbitrage: Underweighted and heavily discounted Chinese internet ADRs (American Depositary Receipts) in Hong Kong are gaining attention as defensive and low-valuation recovery assets, leading to tactical capital inflows.

📊 Regional Market Comparison Overview

Market Indicator / Index: South Korea (Kospi) / Hong Kong (Hang Seng Tech Index)
Recent Performance Trend: Volatile market and correction phase / Maintaining a rebound (up about 10% from previous low)
Key Structural Drivers: Hardware, AI supply chain, memory semiconductors / Software, e-commerce, digital platforms
Positioning Status: Unwinding excessive long leverage / Covering high short positions (switching to buying)