Korean Leveraged ETF Size Halved as KOSPI Drops 5.7% Amid AI Spending Pressure

KOSPI fell 5.72% to 6690.62 points while leveraged ETF assets halved to $26B. Foreign investors net sold 5.2 trillion won despite AI capex narratives, signaling cooling leverage and medium-term outflow risks.

Woofun AI reports that the South Korean composite stock price index declined 5.72% to close at 6690.62 points on July 24th, briefly touching 6650.41 points before algorithmic trading was temporarily halted. While construction, software, and telecommunications sectors demonstrated relative resilience, securities, automotive, and insurance segments recorded the steepest losses. Goldman Sachs noted in its South Korea Market Weekly Report that despite continuous foreign inflows into the technology sector and strengthened semiconductor demand narratives driven by Alphabet’s revised AI capital expenditure expectations, the market faced significant selling pressure.

Data indicates that foreign and institutional investors collectively net sold approximately 5.2 trillion Korean won, while individual investors net bought around 5.18 trillion won on the same day. The report highlights a sharp contraction in financial leverage, with individual investor margin balances falling from a peak of $25 billion to $22 billion, and leveraged ETF assets dropping from $53 billion to $26 billion.

Additionally, KOSPI’s forward 12-month earnings per share estimates were revised downward by 0.4%, with the automotive sector facing the most substantial earnings outlook adjustments. Foreign holdings in the semiconductor sector remain near historical lows, contributing to medium-term outflow pressures.