JPMorgan: South Korean Leveraged ETF Deleveraging Wave Near End

English summary

[JPMorgan: South Korean Leveraged ETF Deleveraging Wave Near End] July 29 - JPMorgan said that the large-scale deleveraging seen in the South Korean stock market since mid-June shows that the unwinding of leveraged ETFs is basically complete. Hedge funds have completed about 90% of the deleveraging process, and leverage levels have fallen back to a more reasonable range. JPMorgan strategists including Mixo Das wrote in a report that, overall, South Korean equities are now attractively positioned, with low valuations and good earnings growth momentum. "With the market pullback, such funds have now fallen to $17 billion," the report said, adding that the earlier rapid inflows into leveraged ETFs have clearly slowed in recent days. However, recent sharp stock declines could still trigger further deleveraging in the coming days. Meanwhile, many investors remain cautious given the risk of a Fed rate hike at the FOMC meeting and high expectations for upcoming earnings from mega-cap tech companies.