According to BlockBeats, Goldman Sachs stated in its latest MarketFeed commentary on July 23 that foreign investors are returning to the South Korean market. The KOSPI surged 4.4% on Thursday, closing above 7000 points, marking the fourth consecutive trading day of net foreign buying. This week saw a net inflow of $3.8 billion from foreign investors, the largest single-week net inflow on record.
Buying activity was highly concentrated in the AI and memory supply chains. Goldman Sachs noted that approximately 87% of foreign investment flowed into the technology sector, with about 91% of nominal trading volume within that sector concentrated in Samsung Electronics and SK Hynix. This suggests that overseas funds returning to South Korean assets are primarily betting on the impact of global AI capital expenditures on the memory cycle.
This round of capital outflows occurred after a period of significant deleveraging in the South Korean market. Previously, the KOSPI index had fallen by approximately 22% from its year-to-date high, with Samsung and SK Hynix becoming the main targets of foreign selling. Goldman Sachs pointed out that foreign ownership in the South Korean semiconductor sector has fallen to 50%, 1.9 standard deviations below the historical average since 2000, indicating a significant easing of position pressure.
Leverage risk is also cooling. The report states that brokerage swap capacity has improved, and financing rates have fallen significantly compared to the previous month; retail margin calls receivables have dropped to 1.4%, returning to the historical average; and margin loan balances have decreased from a high of $25 billion to $22 billion. Previously, the market was concerned about selling pressure from the rebalancing of the South Korean National Pension Service (NPS), but over the past 14 trading days, the pension fund has made net purchases of $19.1 million in the KOSPI, with a cumulative net purchase of $203.7 million between July 14th and 21st.
Fundamental support comes from AI capital expenditure. Goldman Sachs noted that Alphabet's revised $205 billion spending target, along with OpenAI's planned $750 billion cloud spending, could provide South Korean chipmakers with multi-year revenue visibility. The market will now be watching whether Meta, Microsoft, and Amazon follow suit and increase their capital expenditures.
From a market perspective, South Korea's rebound is synchronized with the recovery in global chip sentiment. Earlier this week, the South Korean stock market had already rebounded sharply, driven by the semiconductor sector. Yonhap reported that the KOSPI rose 3.56% on July 21, with Samsung and SK Hynix leading the gains. The WSJ also noted that South Korea's second-quarter economic performance was better than expected, with chip exports being a key support.
From a technical perspective, Goldman Sachs previously indicated that 6800 points was a key support level at the 38.2% Fibonacci retracement level of the KOSPI. After stabilizing near this level, the index rebounded above 7000 points, the MACD began to rise, and the RSI was around 44.6, not yet entering overheated territory. Goldman Sachs' next resistance level is 7700 points, corresponding to approximately 7.8% upside potential.