The rebound followed a 47.4% slide from the April peak, with analysts pointing to shrinking margin loans, institutional buying and policy support rather than a fundamental earnings-driven turn.
South Korea's Kosdaq index jumped 24% over four trading sessions from July 31 to August 5, rebounding sharply after falling 47.4% from its April peak just days earlier. The Korea Exchange said the index closed at 799.59 on August 5, up 2.42% on the day and within reach of the 800 level. Analysts said the move looked less like a durable shift in corporate fundamentals and more like a technical rebound as margin-trading deleveraging lost force and institutional investors stepped in. A key signal was the drop in margin loan balances, which Shinhan Securities said fell 47.2% from ₩11.05 trillion, about $7.8 billion, at the end of April to ₩5.83 trillion, about $4.1 billion, as of August 3. That reduction suggests much of the forced selling tied to credit-financed positions had already been absorbed, easing further compulsory liquidation pressure. Program trading volatility also underscored the speed of the reversal, with buy-side circuit breakers triggered for three straight sessions for the first time, temporarily halting automated buy orders. Institutional demand added momentum. Institutions were net buyers of ₩1.01 trillion, about $708.6 million, in the Kosdaq market over the past four sessions. Analysts at Shinhan Securities and Daishin Securities said flows had rotated from semiconductors into the Kosdaq, with pharmaceuticals and biotech leading gains. Lee Jae-won of Yuanta Securities also pointed to policy support, including eased rules on single-stock leveraged ETFs and steps to incorporate the Kosdaq into pension fund benchmarks and launch new Kosdaq funds within the National Growth Fund. Retail investors also increased exposure through exchange-traded funds. Koscom ETF CHECK showed KODEX Kosdaq 150 ranked third in retail net buying over the past week as of August 4, drawing ₩93.8 billion, about $65.9 million, and returning 12.54%. The KODEX Kosdaq 150 Leveraged ETF (fund aiming for amplified daily moves) ranked sixth with ₩74.7 billion, about $52.5 million, and a 20.97% return. Even so, some analysts said it is too early to call the rebound a full trend reversal, arguing that sustained gains would require support from investment trusts and pension funds as well as earnings improvement among small- and mid-cap stocks.