GOLDMAN SACHS: LEVERAGE ETF TO MAGNIFY MARKET FLUCTUATIONS, SEMICONDUCTOR CYCLE NOT YET HIGH

On 14 July, the global science and technology plate was subject to sharp fluctuations, with “round-the-clock” rhetoric in the semiconductor sector. However, according to recent studies by mainstream investors such as Goldman Sachs and Leuthold Group, the current round of adjustments may not be the result of fundamental reversals, but rather of a “de-leverage” storm of liquidity triggered by highly leveraged transactions. The previous irrational downside of the KOSPI index is of wide concern. According to Goldman Sachs in his report entitled KOSPI Test Key Technology Support, the recently introduced "Single Leverage ETF" is the core driver of volatilisation in the magnifying disk. According to statistics, the two-fold leverage ETF that had previously only tracked Samsung electrons and SK Hercules had dropped by over 30 per cent in one day. This extreme volatility forces the fund manager to sell the bottom-up stock to maintain the target leverage ratio. This forced stutter triggered a vicious circle of “down prices — forced to sell — further down prices” and led to typical liquidity steps. Goldman Sachs estimates that about 62 per cent of net sales by Korean institutional investors in the recent past have resulted from this type of ETF liquidation. Without exception, the United States stock market also faces over-leveraging concerns. Scott Opsal, Chief Investment Officer of Leuthold Group, stated that the growth of the United States financing voucher debt (Margin Debt) had reached the “red light zone”. The data show that, in the 12 months of May this year, the United States share-financed debt grew by 54 per cent to reach the tenth decile in history. In retrospect, when financing expands so dramatically, it tends to correspond to market peaks in 2000, 2007 and 2021. This “loaning of shares because of overconfidence” reflects a “lottery mentality” in the market. According to analysts, these leverages are highly concentrated in semiconductor and AI industrial chains, making market structures extremely vulnerable. Once the mood reverses, the collective withdrawal of the lever will lead to a violent reversal of the already strong varieties。