Goldman Sachs: AI Spending Boost Can't Offset Korea Stock Sell-off, Leveraged ETF Size Halved from Peak

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

Goldman Sachs pointed out that the foreign capital inflow is 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 revised down by 0.4%, with the auto sector facing the greatest pressure from earnings forecast adjustments.

Regarding capital leverage, the outstanding balance of margin loans for Korean retail investors has decreased from a peak of $25 billion to $22 billion, while the size of leveraged ETFs has dropped 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.