Citi has downgraded South Korean equities from overweight to tactical neutral, citing sharp swings in chip stocks over recent weeks and a desire to trim exposure to the artificial intelligence trade. The call comes after the Korea Composite Stock Price Index, or KOSPI, had ranked among the world’s better-performing equity markets this year on the back of the AI rally. That momentum has recently been hit by heavy volatility tied to retail enthusiasm for leveraged exchange-traded funds linked to single stocks, along with valuation concerns. Citi said client conversations have now largely shifted toward the prospect of broader market performance in the second half of the year. Even so, the bank said it remains cautious about making a full exit from the technology sector within emerging-market allocations. Citi also said it remains structurally bullish on the AI theme and has upgraded China to overweight.
Citi has downgraded South Korean equities from overweight to tactical neutral, pointing to sharp volatility in chip stocks in recent weeks as it looks to reduce exposure to the artificial intelligence theme.
The Korea Composite Stock Price Index, or KOSPI, had earlier ranked among the world’s best-performing stock markets this year, supported by the AI trading boom. More recently, the market has been hit by pronounced swings tied to retail enthusiasm for leveraged exchange-traded funds focused on single stocks, as well as valuation concerns.
Focus shifts to the second half
Citi said nearly all client discussions have now turned back to the prospect of broader market performance in the second half of the year. At the same time, it said it remains cautious about a complete withdrawal from the technology sector in emerging-market allocations.
The bank added that it remains structurally bullish on the AI theme and has raised China to overweight.
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