Sometimes the bubble burst will sneak up on you even if it is in plain sight. The Korean KOSPI index is down over 44% in approximately 40 days, with over 300,000 individual leveraged accounts liquidated and over 1.2 million accounts receiving margin calls this month.
The index was about 45-50 percent information technology, with the largest exposure in Samsung and SK Hynix. The problem for the US is that the IT sector is globally integrated, so events in South Korea are not just a local event. Clearly, there has already been some spillover, but the real fear is a contagion that would require valuations for this sector around the globe to be reset.
You can already see the spillover when we compare the one-month returns.
No comments:
Post a Comment