The North Korean stock is at its most volatile stage or is over, with a two-month low after deleveraging. Points

ON 9 AUGUST, THE WORST PHASE OF INSTABILITY IN THE KOREAN STOCK MARKET WAS LIKELY TO HAVE ENDED, FOLLOWING THE REMOVAL OF LEVERAGE FROM HISTORIC SALES AND THE SIGNIFICANT DECLINE IN TRADE IN SOME HIGH-RISK PRODUCTS DUE TO REGULATORY RESTRICTIONS. LAST WEEK, THE SOUTH KOREAN STOCK MARKET VOLATILITY INDEX FELL TO A LOW OF TWO MONTHS, FOLLOWING ITS HISTORIC HIGH IN JUNE. THIS STABILITY HAS BEEN FACILITATED BY FORCED LIQUIDATION, WHICH HAS HELPED TO REDUCE OUTSTANDING BOND OBLIGATIONS; AT THE SAME TIME, MORE STRINGENT REGULATION OF LEVERAGE-BASED ETFS HAS REDUCED THE VOLUME OF TRANSACTIONS AND THE SIZE OF ASSETS ASSOCIATED WITH THE CHIP GIANT, TRISTAR ELECTRONICS AND SK HERCULES. THESE INDICATIONS SUGGEST THAT SOME OF THE EXCESS FUNDS IN THE VOLATILE LOCAL STOCK MARKETS, WHICH HAD PREVIOUSLY BEEN EXACERBATED BY LEVERAGE, HAVE NOW BEEN CLEARED. MORGAN STANLEY ESTIMATES THAT THE DELEVERAGING PROCESS IS MORE THAN HALF COMPLETE. THE KOSPI INDEX FELL BY NEARLY 40 PER CENT FROM ITS HIGHS IN JUNE, AND THE GLOBAL FUND HAS SOLD OVER $100 BILLION IN KOREAN EQUITIES THIS YEAR, WEAKENING EMERGING MARKET FUNDS’ HOLD ON THE COUNTRY。