Is korea the next china 2015

The KOSPI has been one of the biggest winners of the AI boom, driven by the memory cycle, retail enthusiasm and abundant leverage. Over recent weeks, those tailwinds have gradually turned into headwinds. Here are the charts catching our attention.

The KOSPI is testing the steep uptrend that has supported the rally since the start of the year. The bearish 21/50-day moving average crossover remains intact, and the index continues to trade below its 100-day moving average. Hold the trendline and a relief rally becomes possible. Lose it, and the sell-off could accelerate quickly.

The Korean wonder has attracted substantial investor inflows. While exposure has moderated from recent highs, positioning remains elevated and the trade continues to look crowded.

We've written extensively about the KOSPI VIX. During the AI melt-up, rising spot prices and aggressive demand for upside options pushed implied volatility sharply higher. As we've argued in recent weeks, the reverse works just as powerfully. As the KOSPI has rolled over, investors have increasingly sold expensive Korean theta, driving the KOSPI VIX lower. That volatility compression has removed an important source of support and continues to weigh on the index.

The KOSPI has corrected around 25%, flushing out a significant amount of leverage. Total leveraged ETF AUM has almost halved, falling from $53bn to $27bn, yet positioning remains elevated relative to the beginning of the year.

Overall, the margin loan-to-deposit ratio remains manageable as deposit balances have continued to rise. Beneath the surface, however, stress is building, with brokerage receivables and daily forced- liquidation ratios both trending higher. Despite that, retail investors have remained remarkably resilient, continuing to buy throughout the volatility, writes Goldman's Qwek.

History never repeats exactly, but it often rhymes. The KOSPI's surge is beginning to resemble China's 2015–16 onshore rally, with leverage and retail enthusiasm once again taking centre stage, writes