Goldman Sachs: Good AI spending can't stop the selling pressure on Korean stocks, and the size of leveraged ETFs falls short of peak value

Comparing news, Goldman Sachs said in the latest Korean Market Weekly Report that despite recent continuous purchases of KOSPI by foreign investors and Alphabet raising AI capital expenditure expectations to reinforce the semiconductor demand narrative, the Korea Composite Stock Price Index fell by about 2% last week.

Goldman Sachs pointed out that the return of foreign capital is mainly concentrated in the technology sector, but the Korean market is still facing pressure from capital outflows in the medium term, and foreign holdings in the semiconductor sector are close to historic lows. Meanwhile, KOSPI expects EPS to be lowered by 0.4% over the next 12 months, and the automobile sector is under the greatest pressure to adjust profit expectations.

In terms of capital leverage, South Korea's retail financing balance has dropped from a peak of US$25 billion to US$22 billion, and the size of leveraged ETFs has dropped from US$53 billion to US$26 billion. Goldman Sachs believes that AI capital expenditure is still the main supporting factor in the Korean stock market, but declining profit expectations, low foreign positions, and fluctuating risk appetite may continue to amplify short-term fluctuations in the index.