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Traders remain on alert as Kospi-KRW decoupling wanes

Negative equity-FX correlation normalises as vol subsides, but funds poised for future opportunities

USDKRW

Record inflows into leveraged exchange-traded funds (ETFs) by foreign investors drove a breakdown in correlations between Korean stocks and the won during the first half of the year, leaving hedge funds on alert for future outsized moves even after the relationship normalised.

Emerging market currencies typically have a positive correlation with their local equity markets, strengthening in bull

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