South Korea's recent weakness is largely related to capital flows:
1. Corporate buybacks have slowed, foreign capital continues to sell, and trend-following funds have significantly reduced their exposure to South Korea;
2. Long-term funds are more inclined to wait for volatility to subside before increasing their positions, and retail investor sentiment is also relatively fragile.
3. The sell-off has pushed South Korean market valuations to very low levels. Excluding large-cap stocks like Samsung Electronics and SK Hynix, the forward P/E ratio for the rest of the South Korean market is approximately 8.4 times, only at the 11th percentile historically.
4. However, it is still too early to say that the market has bottomed out; currently, it is more like "valuations are very low, but the funding situation is not yet stable." (JPMorgan Chase report, October 19)
