Goldman Sachs Equity Strategist: South Korean Stock Market to Bounce Back After "Frightening" Correction

According to Goldman Sachs Asia-Pacific Chief Equity Strategist Timothy Moe, the South Korean stock market is expected to rebound following a circuit breaker-triggering decline. In the long run, this will prove to be a technical correction, albeit a frightening one within a prolonged bull market. Fundamentals remain very strong.

The Korea Composite Stock Price Index plunged as much as 8.8% on Monday, leading declines among Asian tech stocks. The sell-off occurred after a strong rally driven by AI optimism, during which many investors used leverage to chase gains in a few semiconductor and tech stock sectors.

Timothy Moe stated: “There were clear signs of increasing speculative activity, especially among South Korean retail investors who were particularly keen on buying certain leveraged ETFs. What we are currently seeing is these accumulated positions being forcibly sold, with the leverage effect further exacerbating the decline.” Goldman Sachs upgraded its forecasts for the South Korean and Taiwanese stock markets last week, citing expectations that the AI boom will drive profit growth in these tech-heavy markets. Moe said on Monday that valuations of South Korean stocks are very reasonable and expects that potential profits will continue to drive growth. (Jin Shi)