South Korean stocks continued their powerful rebound in early Wednesday trading, with indications that the unwinding of leveraged positions, which had driven the Kospi index down nearly 30% from its record high, is approaching its conclusion.

The Kospi index surged over 6%, extending its two-day cumulative gain to nearly 10%. The Korea Exchange temporarily suspended program buying. Such protective measures have become routine as volatility in South Korea's $4 trillion stock market has even surpassed that of Bitcoin.

Shares of SK Hynix Inc soared more than 9%. Boosted by renewed sentiment in the artificial intelligence thematic trade, the memory chip giant's US-listed ADRs surged 14% overnight. Another South Korean chip titan, Samsung Electronics Co Ltd, gained more than 6%.

The weeks-long sell-off since the market peaked in June has wiped approximately $1.2 trillion from the value of South Korean stocks. Market participants indicate this decline was primarily driven by the unwinding of leveraged ETF positions and a reduction in retail margin trading, coupled with growing investor concerns over the sustainability of the memory chip boom.

Strategists at JPMorgan wrote in a report this week that the deleveraging process for leveraged ETF positions appears to be about 75% complete. Data from the Korea Financial Investment Association shows that as of July 16, South Korean investors' leveraged stock positions had fallen to a three-month low. The margin balance had decreased by roughly 13% from the peak at the end of June.