Goldman Sachs: AI Spending Boost Can't Offset Korean Stock Sell-Off; Leveraged ETF Size Halved from Peak

Odaily Planet Daily reported that Goldman Sachs, in its latest weekly report on the Korean market, stated that despite recent continuous foreign buying of KOSPI and Alphabet raising its AI capital expenditure expectations, which strengthened the narrative for semiconductor demand, the Korea Composite Stock Price Index still fell 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 was revised down by 0.4%, with the auto sector experiencing the most significant earnings forecast downward pressure.

Regarding leverage, the margin balance of 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 supporting factor for the Korean stock market, but downward revisions in earnings expectations, low foreign positions, and fluctuations in risk appetite may continue to amplify short-term index volatility.