Leveraged ETFs may have fuelled Kospi plunge
Record one-day drop in Korean equity markets follows months-long surge driven by leveraged bets
The collapse of Korea’s Kospi index, which fell more than 12% on Wednesday following a 7% drop the previous day, may have been exacerbated by selling pressure from leveraged exchange-traded funds (ETFs).
Much of the selloff can be explained by fundamentals. Korea’s heavy reliance on Middle Eastern oil makes the country highly vulnerable to an effective closure of the Strait of Hormuz, the main
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