**[Korean Stock Market Deleveraging Nearing End, Foreign Investors Return to Bottom-Fishing Samsung and SK Hynix]** BlockBeats News, August 3: Following significant adjustments in July, some foreign institutions believe the wave of sell-offs triggered by leveraged trading in the Korean stock market may be nearing its end. These institutions have started covering short positions and re-entering Korean chip stocks. Last Friday, the Korean stock market rebounded sharply, with foreign investors ending their year-long net selling trend by purchasing approximately 7.2 trillion Korean won (around $5 billion) worth of Korean stocks in a single day, setting a record for single-day net buying. Meanwhile, Korean retail investors suffered significant losses as the market fell about 40% from its June peak. According to JPMorgan data, the asset size of leveraged ETFs targeting Samsung Electronics and SK Hynix has dropped from approximately $50 billion in late June to around $17 billion last week. Analysts believe that the unwinding of leveraged ETFs and deleveraging by hedge funds is largely complete, and the previous sharp declines in the Korean market were more due to capital liquidation rather than deterioration in corporate fundamentals. Steve Lawrence, Chief Investment Officer at Balfour Capital Group, stated that this round of adjustments is a "leverage event" rather than a profitability issue. He believes Samsung Electronics and SK Hynix continue to benefit from the recovery of the memory chip cycle and the growth in investments in AI infrastructure, with the current stock price declines presenting undervaluation opportunities. JPMorgan's analysis team noted that Korean hedge funds have deleveraged by approximately 90%, returning to healthier levels. Data shows that the average short position in the Korean market has dropped from a recent peak of about 5.3% to 4.3%. However, market risks have not been entirely eliminated. The Korean KOSPI index surged a record 17.9% last Friday but fell nearly 5% again on Monday, indicating continued market volatility. The Korean government has also faced criticism for introducing single-stock leveraged ETFs, which led to massive losses for retail investors, and has begun restricting high-leverage products. [Original Link]