The iShares MSCI South Korea ETF (EWY) surged 6.42% intraday on Tuesday, marking a significant rebound in the Korean equity market.

The rally came as JPMorgan reported that approximately 75% of leveraged ETF unwinding and over 50% of hedge fund deleveraging in Korean equities has been completed, suggesting the most severe selling wave has likely passed. The bank maintained its overweight rating on Korean stocks, characterizing the recent drawdown as a technical washout rather than fundamental deterioration.

Meanwhile, the underlying KOSPI index rebounded sharply, and Korean regulators have announced measures to curb single-stock leveraged ETF trading from August, which is expected to reduce future volatility amplification. Long-term supports such as AI capital expenditure cycles, earnings improvement, and governance reform narratives remain intact, contributing to positive market sentiment.