[JPMorgan: South Korea's Stock Market Deleveraging Process 75% Complete, Maintains 'Overweight' Rating] Reported by Jinse Finance, JPMorgan pointed out that forced deleveraging driven by leveraged ETFs is the primary reason for the recent sharp decline in South Korea's KOSPI index. The institution's analysis suggests that the liquidation of leveraged fund positions, rather than corporate earnings or fundamental deterioration, has amplified market volatility. It is estimated that leveraged ETF assets have now shrunk to approximately $26 billion, with the deleveraging process about 75% complete. The fundamentals of South Korean companies remain solid, but intense deleveraging pressure has weighed on stock prices. The institution predicts that stronger regulatory measures, such as South Korean financial authorities raising the base deposit margin requirements and suspending the listing of new single-stock leveraged ETFs, will further drive the deleveraging process. The report also assessed that hedge fund leverage is rapidly decreasing. JPMorgan stated that the scale of long-short positions managed by hedge funds has dropped from over 5.5 times net assets to less than 4 times, with deleveraging estimated to be more than halfway complete. This year, net foreign sales of South Korean stocks are expected to exceed $110 billion, but approximately 90% of this is concentrated in memory semiconductor stocks. As the weighting of memory stocks has recently declined, the selling pressure from foreign investors is gradually easing. The bank remains optimistic about the medium- to long-term outlook. AI investments and data center investments remain robust, the slowdown in demand for memory chips has not yet been confirmed, and improvements in earnings in the industrial, financial, and consumer goods sectors, as well as enhancements in corporate governance structures, are positive factors for South Korea's stock market. JPMorgan maintains its 'Overweight' rating on South Korea's stock market and forecasts a 12-month target price for the KOSPI index at 12,500 points, consistent with its previous estimate. Its baseline scenario target is 12,500 points, with a bull case scenario at 15,000 points and a bear case scenario at 8,000 points. (Jin10)