- why is everyone suddenly selling

- what changed in the last week that did not change in the last 6 months?

qgin a day ago | parent | next [-]

Markets don’t always need an external change to drop. Sometimes it’s just part of the same price discovery process that ran the price up early on.

	▲	nostrademons a day ago \| parent [-]
		Price is the derivative of position changes - it reflects supply & demand in the market at that moment, which is often highest when everyone is entering the position. When people are buying an asset speculatively, they often all enter the market at once, which drives up the price spectacularly. But then once they've all bought, what happens? That demand drops off; everyone who wants to own memory chip stocks already does. You're left with the value investors who already held and bought early, who see that their asset is now wildly overpriced and want to get rid of it. So the price then drops until that supply drops off and you reach a new equilibrium, often exacerbated by the speculators who see their position evaporate and want to get out.

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alephnerd a day ago | parent | prev [-]

> why is everyone suddenly selling

1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.

2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing discounted Korean equities around 18-24 months ago.

3. This influx of capital along with South Korea's lack of regulation around retail investing led to the KOSPI rally.

4. Now that experienced funds are rebalancing, many retail investors that participated in the rally with limited knowledge got caught with their shirts off.

> what changed in the last week that did not change in the last 6 months

Larger emerging market and Asia funds that began the KOSPI arbitrage have hit internal metrics like IRR in the 20% range and are now rebalancing.

There's a reason South Korea is still classified as an "emerging market" in most risk indices despite being a developed economy.