U.S. and Korean Stock Dip-Buying Flows: Retail Investors Add AI Stocks Against the Trend, JPMorgan Says Further Downside May Narrow

Global stock markets faced another selloff on October 23, with concerns over AI capital expenditure and returns, along with Middle East tensions and rising oil prices, weighing on risk appetite. The Korea Financial Investment Association showed that forced stock sales on October 21 totaled 12.9 billion Korean won, down from 22.6 billion won the previous day; from October 13 to 19, forced sales exceeded 50 billion won daily for five consecutive trading days. Credit financing balances fell to 30.271 trillion won, while investor deposits stood at 89.6343 trillion won, dropping below 90 trillion won for the first time in about nine months. Foreign investors showed signs of covering positions in Korean chip stocks: as of October 21, foreign investors had net bought Samsung Electronics for four consecutive trading days, totaling 1.3247 trillion won; SK Hynix, after 18 consecutive trading days of net selling by foreign investors, turned to net buying of 200.6 billion won on October 21, though analysts cautioned that this cannot yet be seen as a trend improvement.

In the U.S., JPMorgan strategist Arun Jain, tracking trading flows from October 15 to 21, found that retail investors increased buying in semiconductor, new cloud, and storage companies, with tech stock buying at its highest level since the momentum trade reversal in July. The most-bought names included SanDisk, TSMC, and Nebius. Weekly inflows into tech ETFs hit the second-highest level on record, with a record single-day inflow on October 16. On the institutional side, Goldman Sachs data showed that the ratio of short selling to long buying in stocks was approximately 5 to 1, with short leverage in client accounts at the 99th percentile over the past five years. Goldman Sachs noted that if a catalyst emerges to boost tech stocks, crowded shorts could be forced to cover, creating short-squeeze risk. JPMorgan strategist Nikolaos Panigirtzoglou said hedge funds have significantly reduced equity risk exposure, and after some of the capital driving the rally has retreated, the scope for further concentrated selling may narrow, but AI investment returns, funding pressures, and positioning concentration remain key risks—reduced selling pressure does not mean the market has bottomed.

[BlockBeats]