South Korea's KOSPI Falls 25% From Peak; Hana Securities Sees Recovery Parallels to 2004, 2009 Shocks

According to Hana Securities analyst Lee Kyung-soo on July 22, South Korea's KOSPI index has fallen from its July 19 high of 9,052 to 6,800, representing a 25% decline after rising over 20% in the prior year. The analyst compared the current market condition to recovery periods following China Shock (2004) and Dubai Shock (2009), rather than the IT bubble collapse. Following those earlier events, KOSPI rebounded 16.5% and 26.6% respectively, driven by foreign investor buying for rebalancing purposes.

Hana Securities noted that sustained foreign buying is the key indicator for recovery and recommended considering bottom-fishing investments with expected returns of 15-25% over the next year. However, won-dollar exchange rate stability remains a critical variable; heightened currency volatility could alter foreign capital flows. The firm also noted that margin calls appear to have stabilized, with credit lending balances shifting upward.