Citi analysts said the recent sharp pullback in South Korean equities may be nearing its end and kept a 10,000 target on the Korea Composite Stock Price Index, or KOSPI, implying more than 50% upside from current levels. The market has gone through a steep correction, with the KOSPI down 28% from its June 22 record high and falling another 4.5% on Monday. Citi said the sell-off was driven mainly by profit-taking and technical factors rather than a deterioration in fundamentals, with memory chip names such as Samsung Electronics and SK Hynix leading the decline. The bank also pointed to South Korea’s solid economic fundamentals, the AI semiconductor cycle, and a more supportive policy backdrop as factors that could help drive a rebound. Separately, KB Financial Group data showed South Korean retail investors have been heavy buyers of AI semiconductor leveraged ETFs. Since the launch of single-stock leveraged ETFs on May 27, local retail investors have posted net purchases of about 14 trillion won, or roughly $9.4 billion, far above the roughly 2 trillion won bought by foreign investors. The recent market pullback has put that leveraged positioning under pressure, according to CNBC.
Citi analysts said the recent sharp correction in South Korean equities may be close to ending and maintained a 10,000 target for the Korea Composite Stock Price Index, or KOSPI. That target implies more than 50% upside from current levels.
South Korean stocks have been through a volatile stretch. The KOSPI has fallen 28% since its record high on June 22, and the index dropped another 4.5% on Monday.
Citi said the latest decline was driven mainly by profit-taking and a technical correction, not by weaker fundamentals. The sell-off was led by memory chip companies including Samsung Electronics and SK Hynix.
The bank also said South Korea’s strong economic fundamentals, the AI semiconductor cycle, and a more friendly policy environment could support a rebound in the stock market.
South Korean retail investors had previously poured money into leveraged ETFs tied to AI semiconductor names. According to KB Financial Group data, local retail investors have recorded net purchases of about 14 trillion won, or around $9.4 billion, since single-stock leveraged ETFs were launched on May 27. That compares with about 2 trillion won in purchases by foreign investors. The recent market pullback has put a large amount of leveraged capital under pressure.
The report was cited by CNBC.
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