JPMorgan Warns: Leveraged ETF Selling Pressure on Korean Stocks Not Yet Cleared, Risk of Another Sell-Off Remains
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KOSPI has plunged over 15% in five days for the third time this year, pushing forward P/E to a record low, yet JPMorgan warns that leveraged-ETF positions remain stubbornly high while all three sources of buying power have retreated — until that overhang clears, another selloff cannot be ruled out.
Valuations are at rock bottom — why is no one stepping in?
Strip out Samsung and SK Hynix, and the rest of KOSPI trades at just 8.4× forward P/E — the 11th percentile of its entire history.
The RSI (relative strength index — a gauge of short-term overbought or oversold conditions) has dropped to its lowest since the "reciprocal tariffs" episode; the number of oversold stocks has hit an extreme.
This means → by the numbers, Korean stocks are "cheap enough." But JPMorgan stresses that oversold conditions can persist far longer than expected — "cheap" alone does not mean the selling is over.
Why have all three sources of buying power vanished at once?
Corporate buybacks: the single biggest support since late August last year, but Samsung has completed its program and SK Hynix is near the end of its own.
Foreign and institutional flows: foreigners continue to sell on a net basis; domestic Korean institutional demand remains limited.
Trend-following funds (systematic strategies that buy or sell based on price momentum) have flipped from extreme net-long to net-short; long-only investors are waiting for volatility to settle before re-entering.
In plain terms = the buyers are either done, gone, or on the sidelines — the market has hit a buying vacuum at its most fragile moment.
Why are leveraged ETFs the biggest hidden risk?
Leveraged ETFs (funds that amplify daily index moves by a multiple) have seen heavy selling, yet their outstanding positions remain stubbornly elevated — outflows have been surprisingly small.
This means → the surviving leveraged positions generate mechanical selling pressure on every sharp down day — not because someone chooses to sell, but because the product structure forces it.
JPMorgan states plainly: until this leveraged overhang is fully unwound, another wave of selling cannot be ruled out.
Prices are plunging — but are fundamentals actually deteriorating?
Samsung and SK Hynix shares have been hit hard, yet forward earnings estimates for both companies have continued to rise through this correction.
Earnings expectations for industrials, financials, and healthcare are also trending upward.
This reflects a repricing driven by fund flows and risk appetite, not a broad fundamental collapse — the question is "who is selling," not "are these companies broken."
The SOX index is stabilizing while KOSPI keeps falling — can this divergence last?
The Philadelphia Semiconductor Index has shown early signs of stabilization, while KOSPI remains under pressure — the gap between the two keeps widening.
JPMorgan argues this divergence cannot persist indefinitely; the two will eventually converge or move in tandem.
In plain terms = if KOSPI fails to hold its current support level, the U.S. semiconductor rebound may soon hit resistance too. Conversely, whether leveraged positions can be meaningfully reduced is the key test for whether Korean stocks can attract genuine buying interest.
市场有风险，内容仅供研究参考，不构成投资建议。