Deleveraging

• South Korea's KOSPI index plummeted more than 33% in July, marking its worst single-month performance in history and surpassing declines seen during the 1997 and 2008 financial crises. • The crash was driven by a combination of cooling global AI stocks, a Bank of Korea rate hike, SK Hynix's disappointing earnings, and reports of China producing its own DUV lithography machines. • This collapse represents a rapid reversal of a bull market that had been heavily supported by leveraged capital.

• South Korean stocks saw a powerful rebound on July 22, with the KOSPI index surging over 6% intraday and triggering a trading halt by the Korea Exchange. • This surge was part of a broader Asian market rally, including a 1,000-point jump in Japanese stocks and one of the largest intraday gains in Taiwan's market history. • The rally is linked to key AI-driven sectors, specifically impacting major tech firms like Samsung Electronics and SK Hynix.