South Korea's Kospi index has experienced a significant decline of around 20% in July, marking its largest monthly loss since 2008, primarily due to profit-taking by investors. Despite this downturn, the index has surged approximately 60% year-to-date in 2026, following a remarkable increase of over 75% in the previous year.
Analysts from JPMorgan have expressed optimism, suggesting that the market is nearing the end of a leveraged ETF unwind, estimating it to be about three-fourths complete.
TS Lombard views the recent drop as a necessary deleveraging from semiconductor stocks rather than an indication of a broader market collapse, with prices reflecting a projected 45% normalization of memory earnings for the next year.
Additionally, Bank of America noted that selling pressure may be diminishing, as the broader market has seen larger losses than its largest stocks for the first time since March, which previously marked a local bottom. Investors have faced volatility, highlighted by a record drop of over 12% in a single day in March, but the current analysis suggests a potential recovery ahead