The KOSPI's 12-month forward price-to-earnings ratio (PER) has fallen to 5.1x, approaching an all-time low. Bloomberg reported on the 9th that following the recent sell-off, Korean stocks have entered undervalued territory in some indicators, and valuation pressures have eased significantly.

As valuations have declined alongside sharp stock price drops, volatility in the Korean stock market is also showing signs of stabilization. The KOSPI 200 Volatility Index (VKOSPI) surged to 97.99 during trading on June 29, marking its highest level since the 2008 financial crisis, and fluctuated around the 90 level through the end of last month. However, it has come down to the mid-70s this month.

Bloomberg cited the reduction in margin trading balances due to forced liquidations and the tightening of regulations on leveraged exchange-traded funds (ETFs) as background for the volatility stabilization. In particular, the analysis suggests that the overheating has partially eased as trading volumes and asset sizes of leveraged products linked to large-cap semiconductor stocks such as Samsung Electronics and SK Hynix have shrunk.

Li Ping Liao, a portfolio manager at Templeton Global Investment, acknowledged that Samsung Electronics and SK Hynix are currently trading at cheap prices with solid earnings outlooks. However, Liao noted that the extreme volatility that persisted until recently is prompting investors to take a cautious approach in the short term.

Bloomberg reported that although volatility has eased somewhat, it remains above historical averages. As a result, global investors are carefully weighing cheaper valuations and favorable earnings outlooks against the risk of further sharp fluctuations.