Viewpoint: Micron to Face Roughly 2 Million Shares of Forced Selling on Monday, Passive Rebalancing of Leveraged Products to Suppress South Korean Stock Market

June 7th — Degentrading, a product researcher specializing in leverage products, warned that the Hong Kong-listed leveraged fund Southbound Double Long SK Hynix (7709.HK) will have to forcibly sell around 2 million shares at the opening of South Korea’s stock market this coming Monday. That sell order volume accounts for 40% of SK Hynix’s normal daily trading volume, generating enormous mechanistic selling pressure. The bigger concern: The gamma effect of this leverage product will drive further price drops, which will in turn spark more selling pressure and possibly trigger a chain reaction. Degentrading forecasts extreme downward pressure on South Korea’s stock market on Monday. He boldly projects that EWY (the iShares MSCI South Korea ETF) could slump to $145 by the time U.S. stock markets open on Monday, down from its current level of $175. Degentrading acknowledges this prediction “may sound a bit crazy,” but says its core logic is that passive rebalancing selling pressure from leverage products will take over the market, resulting in an extremely bearish short-term view of South Korea’s semiconductor sector and overall stock market. He emphasizes focusing on the amplification effects and liquidation risks posed by leverage tools like Southbound Double Long SK Hynix (7709.HK).