Are Korean Retail Investors Unfazed? $70 Billion Flows In After Market Bloodbath, Experts Reveal Foreign Investors' Move: Aggressive Accumulation

South Korea's stock market suffered its largest monthly decline since the 2008 global financial crisis in July, due to a backlash from high-leverage policies. The market has now passed the most severe phase of panic-driven selling and entered a consolidation period following deleveraging.

Financial writer You Tinghao, appearing on the program "Caijing Haojiao," pointed out that most investors are still adding positions. The July correction was concentrated in chip stocks and memory-related概念股, and both Taiwan and South Korean markets are positioned within the Philadelphia Semiconductor Index sector, thus being dragged down.

However, in the context of global equities, the impact has not been as severe as imagined. "Most stocks globally haven't even entered a mid-term correction yet," You stated.

You emphasized that while market positioning in South Korea has been significantly cleaned up, many cash investors globally continued to accumulate positions in July. "Everyone not using leverage is adding positions." This year, inflows into physical (spot) ETFs have reached nearly $70 billion, setting a new high compared to previous years.

He added that while leveraged funds are indeed exiting amid the correction, cash-based capital is flowing in. Thus, the extreme volatility in South Korean stocks reflects the completion of deleveraging, not a broad collapse in market support. "Only some leveraged investors were forced out," but the majority continue to buy, showing no collective pessimism.

Currently, South Korean ETF assets have rebounded to April-May levels, indicating that even as leveraged ETFs unwind, retail sentiment remains optimistic—investors are simply reducing leverage slightly. Meanwhile, foreign investors' net selling of Korean stocks has approached $100 billion, signaling a systemic deleveraging process. However, this does not mean the correction is over.

South Korea's advantage lies in its larger valuation headroom post-correction compared to overseas markets. The sharp drop and earnings releases have revealed sequential value investment opportunities, suggesting strong future buying momentum.

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