A 70% decline in leveraged ETF assets and reduced margin lending indicate the forced selling that accelerated the market's fall is largely complete. This deleveraging creates a more stable foundation for a sustainable recovery.
The initial market rally was fueled by highly-leveraged domestic retail investors. With tighter leverage rules, future growth now depends on attracting foreign institutional capital, hinging on corporate governance and capital management reforms.
A healthy recovery cannot rely solely on the AI-driven tech sector. The next phase will be more balanced, with contributions from industrials, financials, and consumer staples, prioritizing earnings resilience over concentrated, high-speed growth.