Foreign capital is starting to bottom-fish in the Korean stock market, while retail investors' leverage has already dropped from $50 billion to $20 billion. The deleveraging speed of Korean leveraged ETFs is even faster than when I last wrote about this data. Last time, the total size of Korean leveraged ETFs was still around $26.5 billion, with the leveraged exposure accounting for about 2.1% of the free-float market cap of the Korean stock market. According to the latest data, the total size has further dropped to about $20 billion, and the leveraged exposure has fallen to about 1.5%. Compared to the peak at the end of June, the total size of Korean leveraged ETFs has shrunk by about 60% from over $50 billion, and the nominal exposure as a percentage of free-float market cap has dropped from 3.3% to 1.5%, essentially returning to the levels seen in late February to early March. The stock exposure maintained by these funds is getting smaller and smaller, and the mechanical buying pressure on Samsung Electronics and SK Hynix is rapidly disappearing. In the past few months, when Korean semiconductor stocks were rising, the net asset value of leveraged ETFs increased, forcing funds to continue buying to maintain fixed leverage. The larger the scale, the stronger the rebalancing buy orders before market close. Rising stock prices attracted more retail funds, creating a cycle of rising prices, subscriptions, increased positions, and further price increases. However, when stock prices fell, the shrinking net asset value of the funds led to retail redemptions, forcing funds to continue reducing positions. Daily rebalancing during declines resulted in additional sell-offs. The funds that previously amplified the rise of Samsung Electronics and SK Hynix are now continuously weakening the Korean stock market's ability to absorb selling pressure. This also explains why the latest capital flows show foreign investors starting to make large net purchases, while Korean retail investors are concentrated on selling. Retail investors may not have suddenly turned bearish; it's more likely that the leveraged funds that bought at high levels earlier are finally using the rebound to reduce their positions, while foreign investors are stepping in to take over the shares sold by retail investors after valuations and positions have significantly dropped. However, this round of deleveraging is not yet over. Currently, the size of Korean leveraged ETFs is still nearly three times that of the beginning of the year, and the leveraged exposure as a percentage of free-float market cap is still significantly higher than at the start of the year. Leverage has come down from extreme levels but has not fully returned to normal. @Gate Crypto, US stocks, Hong Kong stocks, Korean stocks, gold, CFD, prediction markets all-in-one trading platform