U.S. and Korean Stock Markets: Retail Investors Increase Positions in AI Stocks Against the Trend; JPMorgan Says Further Downside May Narrow

BlockBeats news, October 23 — Global stock markets suffered a fresh round of selling as doubts over AI capital expenditure and investment returns resurfaced, while Middle East tensions and rising oil prices also weighed on risk appetite. Data from the Korea Financial Investment Association showed that on October 21, the amount of forced stock sales was KRW 12.9 billion, down from KRW 22.6 billion the previous day; previously, from October 13 to 19, forced selling exceeded KRW 50 billion per day for five consecutive trading days. Meanwhile, margin financing balances fell to KRW 30.271 trillion, and investor deposits dropped to KRW 89.6343 trillion, falling below KRW 90 trillion for the first time in about nine months.

Foreign investors returned to Korean chip stocks. As of October 21, foreign investors had net bought Samsung Electronics for four consecutive trading days, with cumulative purchases reaching KRW 1.3247 trillion; previously, they had net sold about KRW 7.8 trillion over 12 consecutive trading days. SK Hynix, after being net sold by foreign investors for 18 consecutive trading days, turned to net buying of KRW 200.6 billion on October 21. However, analysts cautioned that this change cannot yet be deemed a trend of improving fund flows.

In the U.S. market, JPMorgan strategist Arun Jain tracked trading flows from October 15 to 21 and found that retail investors increased purchases of semiconductor, neocloud, and memory companies, with buying of individual tech stocks reaching the highest level since the momentum trade reversal in July. The most-bought names were SanDisk, TSMC, and Nebius. Weekly inflows into tech ETFs reached the second-highest level in history, with single-day inflows hitting a record on October 16.

Institutional positioning, meanwhile, showed crowded short positions. Goldman Sachs prime brokerage data showed that the ratio of stock short selling to long buying was about 5 to 1, and short leverage in client books was at the 99th percentile of the past five years. Net leverage at fundamental long-short equity funds was near a three-year low, though gross leverage rose somewhat. Goldman Sachs warned that if a catalyst emerges to drive tech stocks higher, crowded shorts could be forced to cover, posing a potential short-squeeze risk.

As for whether the market is near a bottom-fishing window, JPMorgan strategists Nikolaos Panigirtzoglou and his team believe hedge funds have already significantly cut equity risk exposure, and after some of the funds that previously drove the rally retreated, the room for further concentrated selling pressure may narrow. The team views semiconductors as an important gauge of fund risk exposure, but also noted that AI investment returns, financing pressures, and position concentration remain risks, and that reduced selling pressure does not mean the market has bottomed.