Goldman Sachs: AI Spending Boosts Korean Stock Selling Pressure, Leveraged ETF Size Halved from Peak

BlockBeats News, July 27th, Goldman Sachs pointed out in its latest South Korea Market Weekly Report that despite foreign inflows buying KOSPI continuously recently, and Alphabet's upward revision of AI capital expenditure expectations continuing to strengthen the semiconductor demand narrative, the South Korean composite stock price index fell by about 2% last week. In terms of sectors, the construction, software, and telecommunications sectors showed relatively resilient performance, while the securities, automotive, and insurance sectors experienced the most significant declines.

On the market front, KOSPI further extended its decline on July 24th, closing down 5.72% at 6690.62 points, briefly touching 6650.41 points during the session, with algorithmic trading also briefly halted. According to Yonhap News Agency, escalating Middle East tensions suppressed risk appetite, with foreign and institutional investors collectively net selling approximately 5.2 trillion Korean won that day, while individual investors net bought around 5.18 trillion Korean won.

Goldman Sachs believes that foreign inflows are mainly focused on the technology sector, but the South Korean market still faces significant medium-term outflow pressure, and foreign holdings in the semiconductor sector are also near historical lows. At the same time, KOSPI's forward 12-month EPS has been revised down by 0.4%, with the automotive sector facing the most significant earnings outlook adjustment pressure.

Financial leverage is also cooling off. The report shows that South Korean individual investors' margin balance has decreased from a peak of $25 billion to $22 billion, and the leverage ETF scale has dropped from $53 billion to $26 billion. For the South Korean stock market, AI capital expenditure remains the main supportive theme, but with profit expectations being revised downwards, foreign positions relatively light, and fluctuating risk appetite, the index's short-term resilience may continue to expand.