South Korean stocks jumped on Wednesday as forced selling tied to leveraged positions that had pushed the benchmark nearly 30% below its peak appears to be nearing an end. The rebound eased selling that had erased about $1.2 trillion of market value since June highs. Market participants said the rout was driven mainly by leveraged ETFs unwinding, a contraction in retail margin loans and renewed doubts over the sustainability of the memory-chip boom. JP Morgan strategist Mixo Das and colleagues e

South Korean stocks jumped on Wednesday as forced selling tied to leveraged positions that had pushed the benchmark nearly 30% below its peak appears to be nearing an end. The rebound eased selling that had erased about $1.2 trillion of market value since June highs. Market participants said the rout was driven mainly by leveraged ETFs unwinding, a contraction in retail margin loans and renewed doubts over the sustainability of the memory-chip boom. JP Morgan strategist Mixo Das and colleagues estimate leveraged ETF holdings have been about 75% unwound. Data from the Korea Financial Investment Association show leveraged equity exposure fell to a three-month low as of July 16; margin lending dropped to KRW33.4 trillion (USD22.6bn), down 13% from the end-June peak, which many investors view as a clear signal of improving market conditions.