Goldman Sachs: AI Spending Boost Cannot Offset Korea Stock Selloff, Leveraged ETF Size Halved from Peak

Odaily Odaily Planet Daily reports that Goldman Sachs stated in its latest South Korea market weekly report that despite recent continuous foreign buying of KOSPI and Alphabet's upward revision of AI capital expenditure expectations strengthening the semiconductor demand narrative, the Korea Composite Stock Price Index still fell about 2% last week.

Goldman Sachs pointed out that foreign capital inflows are mainly concentrated in the tech sector, but the Korean market still faces medium-term capital outflow pressure, with foreign holdings in the semiconductor sector near historical lows. Meanwhile, the expected EPS for KOSPI over the next 12 months has been lowered by 0.4%, with the auto sector facing the most significant earnings forecast adjustment pressure.

Regarding capital leverage, the outstanding balance of margin loans for Korean retail investors has dropped from a peak of $25 billion to $22 billion, while the size of leveraged ETFs has fallen from $53 billion to $26 billion. Goldman Sachs believes that AI capital expenditure remains a major support factor for the Korean stock market, but downward revisions in earnings expectations, low foreign institutional positions, and fluctuations in risk appetite may continue to amplify short-term index volatility.