On July 19, amid a global semiconductor sell-off and momentum reversal, the South Korean KOSPI index has fallen nearly 25% from its peak on June 22, with an additional decline of 8.8% this week alone. As of July 16, the 12-month forward P/E ratio dropped to 5.78 times, below the lows seen during the 2008 global financial crisis, marking the lowest level since 2004. In its weekly report on July 17, Goldman Sachs indicated through stress testing that even if earnings per share were to be adjusted down by 41% (the worst level during the financial crisis), the KOSPI would still correspond to approximately 8965 points based on a valuation of 13 times the EPS at the 2008 low, which is significantly higher than current levels, indicating that the current valuation presents a positively skewed risk-return profile. From a price-to-book ratio perspective, the forward price-to-book ratio has fallen to 1.43 times, while the forward ROE remains at a high level of about 25%, showing a rare degree of divergence. UBS added that excluding Samsung Electronics and SK Hynix, the overall forward P/E ratio of the KOSPI is 8.79 times, still below the historical average. There has been a marginal shift in foreign capital flows: this week, foreign investors turned net buyers of about 19 billion won, mainly flowing into the automotive and retail sectors, while the technology sector still faced net selling of about 76.6 billion won; the Korean won appreciated by 1.2% against the dollar this week. However, Goldman Sachs' risk gauge for Korean stocks remains at -2.7, indicating a deep risk-averse zone. On the regulatory front, the South Korean government has introduced a series of new rules for single-stock leveraged ETFs: starting August 5, cash margin requirements will increase from about 3 million won to 30 million won, and from August 19, alternative collateral will be prohibited, new product listings will be suspended, and marketing of existing products will be immediately banned, with the minimum trading unit expected to rise from 1 unit to 20 units in November. UBS believes that the 30 million won all-cash margin requirement will significantly compress retail participation, but the market has already completed part of the deleveraging in advance—the total scale of single-stock leveraged ETFs has decreased from a peak of about 24 trillion won on June 25 to about 17 trillion won. Goldman Sachs noted that although the balance of margin financing has decreased from a peak of 38 trillion won to 33 trillion won, the deposit balance of Korean investors has risen to 110 trillion won, leading to a significant decrease in the ratio of financing balance to deposits, indicating limited systemic risk in overall leverage. Strategically, Goldman Sachs maintains its target price of 12,000 points and recommends buying on dips, while UBS maintains a target price of 9,200 points and shifts to a barbell strategy, adding defensive allocations in consumer, healthcare, and construction sectors while removing cyclical and growth sectors that have seen significant prior gains. Both institutions agree that Korean stock valuations are at historically extreme lows, but they have different approaches to short-term volatility and AI demand uncertainty.