EW EWY iShares MSCI South Korea ETF Loading... : Bullish and Bearish Analyst Opinions

Record $20 billion inflows into tech ETFs in July, heavy dip buying in semiconductors (SOXX) and South Korea (EWY) despite recent selloff, indicating traders expect a rebound.

The market is in the final stage of capitulation: deleveraging, dried-up volume, and pervasive fear. If the KOSPI holds above the recent low and rebounds, a strong rally to 8,000–8,300 is possible. The imminent 20-day/60-day moving average death cross is often a short-term bottom signal. Investors should not sell into a clumsy initial rebound; instead, hold until next week after earnings, because the bounce could turn into a surprisingly strong upswing. Only if the recent low is broken after a rebound should one run.

KOSPI will not break 6,000; the 6,300 level is strong support and if breached will quickly recover. Foreign buying in index futures at the close signals accumulation. A technical rebound is highly likely, making the index a buy at current levels.

The KOSPI has been falling on sharply declining trading volume and value, a pattern that historically precedes a rebound. Foreigners have shifted from persistent selling to net buying in spot and futures, and overall fund flows into Korean equities are improving. Valuation is cheap relative to history, and while timing is uncertain, the market is likely to return to its fair value band, making this a holding and accumulation point for those using cash.

The KOSPI is trading at a trailing P/E of just 5-6x, even below the COVID-19 bottom, and its forward PEG is only 0.25 based on 10-20% earnings growth. If the current semiconductor cycle is structural rather than cyclical, this valuation is unjustifiably low. The market is pricing in a severe earnings collapse that is unlikely to happen given persistent AI-related demand and LTA contracts.

Foreign investors bought over 1 trillion won of KOSPI futures near the market close, adding to 700 billion won bought last Thursday. This pattern of heavy futures buying strongly signals a short-term rebound for the KOSPI tomorrow. Nasdaq futures also turned higher after the Korean close, reinforcing the signal.

Korean stocks are set to rebound because macro conditions are improving: U.S. inflation is slowing, reducing tightening fears; the Korean won is strengthening (potentially to around 1,430 won per dollar); the Korea-U.S. interest rate gap is narrowing; and foreign equity selling is moderating. A stronger won historically pushes Korean stocks higher.

KOSPI index has broken its 20-week moving average and is at a critical juncture. If it can regain the 7,000 level within 3–4 weeks, supported by strong memory earnings and big tech guidance, the correction is normal and the uptrend can resume. Failure to recover 7,000 within about a month would signal a mid-term downtrend. The critical technical support is the prior low around 6,449.

The KOSPI has corrected about 30% from its peak while many stocks have halved, yet corporate fundamentals have not deteriorated to that extent. The index is now near the 120-day moving average around 6,500–6,630, and the guest expects a bounce back because historically such oversold conditions without fundamental breakdown eventually lead to a rebound, and most experts now agree the market is oversold.

Korea and Taiwan are the strongest plays on the AI infrastructure buildout in Asia-Pacific. Unlike China, these markets can deliver profits and returns from the AI capex cycle, making them attractive equity markets.

The Korean Won has strengthened significantly in July, with the largest drop among G20 currencies. Historically, when the Won strengthens, Korean stocks rise unconditionally. The current Won decline is comparable to late 2022 when the market bottomed and then rallied. Park Se-ik expects the KOSPI to recover from around 6,800 to 7,500-8,500 within a few months, and is personally adding to positions.

Taiwan and South Korea are in the sweet spot of the global AI supply chain, with massive over-demand relative to supply for their products and no indication that this will change in the near term.

The KOSPI is testing the critical 120-day moving average and has formed a potential double bottom. Extreme fear and panic, with investors refusing to even check their accounts, mark historically reliable turning points. The market has priced in maximum pessimism and is set for a sharp bounce; breaking above 7,000 would end the downtrend.

Korea's current situation mirrors the 1980s, when low oil, low rates, and a weak won generated a massive trade surplus that drove the KOSPI from 200 to 1,000 (a 5x rally). Today, AI semiconductor exports are driving a similar trade surplus, and the US geopolitical realignment favors Korea, setting the stage for a long-term bull market that could take the KOSPI from 2,500 toward 9,000.

The KOSPI index has fallen to a PBR of 5.8x, a level seen only during financial crises, despite no systemic event. The extreme correction will invite smart money accumulation. A technical rebound to at least 8000 points is likely as panic subsides and positive catalysts from earnings emerge.

The KOSPI has corrected sharply with PER falling to around 5x, many stocks down 40-50% from highs, and unless a severe crisis occurs, a drop of more than 50% is unlikely. Selling pressure appears exhausted, and the market is oversold, so it should turn around from here.

This week is critical to watch whether the KOSPI index and key semiconductor stocks (Samsung Electronics, SK hynix) hold their recent lows. A successful hold and a strong turning signal would indicate that the forced selling wave is over and a meaningful rebound can begin. The speaker highlights that the lows have not been broken yet and a buy-the-dip response at those levels would be a powerful positive signal.

The recent 30%+ correction in Korean semiconductor stocks and the KOSPI index is purely sentiment-driven without any fundamental crisis. AI capex is set to keep rising, memory companies now have ironclad long-term agreements (LTAs) that prevent order cancellations, and valuations have compressed to crisis levels—KOSPI P/E at 5.8x vs a 10-year average of 10x, implying a 40%+ earnings decline that is not supported by reality. The speaker expects the correction to be over and sees this as a buying opportunity, with smart money likely to start accumulating, targeting a bounce to around 8,000 on the KOSPI.

Semiconductors (SMH) are testing the critical 50-day moving average and the 570 support level that has defined the uptrend. A breakdown below this level would signal the start of a semiconductor sell cycle. Meanwhile, the KOSPI (South Korean index) has already fallen 30% from highs and is in full distribution mode, acting as a leading warning for AI-related equities.

Korean bank holding companies are the new market leaders because they held up and even rose during the recent crash and circuit-breaker sell-off, showing resilience; global institutional fund managers are rotating into them, and they exhibit strong relative strength.

South Korea's KOSPI index went parabolic and has since suffered a huge tumble. Massive leverage built up via options and levered ETFs; over a million Korean trading accounts reportedly received margin calls on Friday. Even strongly bullish AI news from SK Hynix, ASML, and TSMC failed to lift these stocks, signaling a dangerous momentum break and potential for further unwind.

KOSPI has fallen over 30% from its peak and, historically, a drop of this magnitude without a US recession or global IB failure has always been a buying opportunity. Foreign investors are already accumulating futures and starting to buy cash equities. Selling into further weakness is a mistake; the index is deeply oversold and likely to rebound.

KOSPI is expected to gap down on Monday but likely find a bottom and rebound. The selloff is driven by supply/demand factors rather than fundamental deterioration, and risk/reward now favors upside as the market has fallen sharply and big-tech earnings next week could restore confidence.

Foreign futures positioning is improving, with net selling pressure declining and the 21-day average of foreign futures/options flows shrinking; combined with today's heavy foreign equity buying, this supports a technical rebound in the KOSPI to the 7,800–8,300 range before the downtrend potentially resumes.