Goldman Sachs Flash Note on South Korean Stocks: After KOSPI Surpasses 7,000 Points, Next Resistance Is Seen at 7,700

BlockBeats News, July 23, Goldman Sachs stated in its latest MarketFeed briefing that foreign investors are returning to the South Korean market. The KOSPI surged 4.4% on Thursday to close above 7,000 points, with foreign capital net buying for the fourth consecutive trading day. This week, foreign net inflows reached $3.8 billion, marking the largest weekly foreign capital inflow on record.

The buying was highly concentrated in the AI and storage chain. Goldman Sachs noted that about 87% of foreign buying flowed into the technology sector, with approximately 91% of the nominal trading volume in the technology sector focused on Samsung Electronics and SK Hynix. This indicates that overseas funds are replenishing Korean assets, with the core still betting on global AI capital expenditure driving the memory cycle.

This inflow comes after a sharp deleveraging in the South Korean market. Previously, the KOSPI had fallen about 22% from its year-to-date high, with Samsung and SK Hynix being the main battleground for foreign selling. Goldman Sachs pointed out that the foreign ownership ratio in the Korean semiconductor sector has dropped to 50%, 1.9 standard deviations below the historical average since 2000, indicating a significant easing of position pressure.

Leverage risks are also decreasing. The report stated that broker swap capacity has improved, financing rates have significantly declined from the previous month, retail investors' additional margin receivables have fallen to 1.4%, returning to the historical average, and margin loan balances have dropped from a high of $25 billion to $22 billion. Previously, the market was concerned about selling pressure from the Korean National Pension Service (NPS) rebalancing, but over the past 14 trading days, the pension fund has net bought $19.1 million on the KOSPI, with a total net purchase of $203.7 million from July 14 to 21.

The fundamental support comes from AI capital expenditure. Goldman Sachs mentioned that Alphabet's raised $205 billion spending target for 2050, as well as a planned $750 billion cloud spending by OpenAI, could provide several years of revenue visibility for Korean chip manufacturers. The market will now focus on whether Meta, Microsoft, and Amazon will follow suit in increasing their capital expenditures.

In terms of market performance, South Korea's rebound is also in sync with the global chip sentiment recovery. Earlier this week, the Korean stock market had already rebounded significantly under the leadership of the semiconductor sector, with KOSPI rising 3.56% on July 21, led by Samsung and SK Hynix; WSJ also mentioned that South Korea's second-quarter economic performance exceeded expectations, with chip exports being a key support factor.

Technically, Goldman Sachs previously indicated that 6,800 points was a key support level for KOSPI's 38.2% Fibonacci retracement. After stabilizing near this level, the index rose back above 7,000 points, the MACD started to trend upwards, and the RSI was around 44.6, not yet in the overbought zone. The next resistance level provided by Goldman Sachs is 7,700 points, corresponding to approximately 7.8% upside potential.