JPMorgan's latest research report concludes that the deleveraging process in the South Korean stock market is basically over! 1️⃣ Leverage ETF unwinding 100% complete: The scale has plummeted from $50 billion at the end of June to $17 billion, with fund inflows completely halted. 2️⃣ Hedge fund deleveraging about 90% complete: JPMorgan's prime brokerage long-short ratio has dropped sharply from 5.7 to 3.2, nearing the normal range. 3️⃣ Retail margin risks have eased, with margin balances not showing abnormal surges and now moderately retreating to $20 billion. Retail investors hold sufficient cash, overseas assets, and profit buffers, making another disorderly forced liquidation stampede—aka circuit breaker events—unlikely to occur. 4️⃣ Foreign capital outflow has significantly slowed. Previously, over $110 billion in foreign capital exited, with 90% concentrated in two leading memory chip companies (Samsung and SK Hynix). The MSCI Emerging Markets Index weight for these two companies was sharply reduced (from 9.5%→6.5% and 8.3%→4.5%, respectively), easing the selling pressure caused by passive index rebalancing. Final conclusion: The main forces behind the massive market sell-off earlier no longer have chips to sell. The extreme mechanical unwinding phase is completely over, and a short-term bottom is forming! By the way, back in early July, JPMorgan issued a research report warning about South Korea's high leverage pressure and potential risks. So, their insights are pretty spot on! This post is sponsored by @binancezh, "Binance Buy US Stocks: Global assets, zero time lag, one-click access"!