Goldman Sachs says AI trade rebalancing, not macro fears, drove this week’s global selloff

South Korea's Kospi suffered one of its most violent weeks in recent memory, with circuit breakers triggered repeatedly and the index closing down 5.81% on June 26 alone after plunging more than 8% intraday. The selloff, which saw Samsung Electronics and SK Hynix fall more than 9% during trading before partially recovering, has been attributed not to macroeconomic fears but to a structural rebalancing within the global AI investment boom.chosun

The Short Gamma Trap

At the center of the Korean market's amplified volatility lies a new class of single-stock leveraged ETFs tracking Samsung and SK Hynix, launched in late May. These products, which now account for nearly a quarter of South Korea's total ETF turnover, carry what market participants call "short gamma" characteristics — a structure that mechanically buys more when prices rise and sells more when they fall. When the Kospi plunged nearly 10% on June 23 in what was dubbed "Black Tuesday," analysts pointed to mechanical rebalancing of these ETFs as a force that deepened the drop. South Korea's Financial Supervisory Service had already convened an emergency meeting warning against concentrated bets and excessive leverage, while the country's top financial regulator sharply criticized the products for enriching securities firms at retail investors' expense.biz.chosun+2

The VKOSPI fear gauge surged to an all-time high of 95.06 on June 24, far exceeding the 83.58 recorded during the Iran war outbreak in March and surpassing levels seen during the 2008 financial crisis.news.sbs+1

Goldman Sachs: An AI Rebalancing, Not a Warsh Wobble

Goldman Sachs The Goldman Sachs Group, Inc. ↗ 0.52% partner Mark Wilson argued in a note this week that the global volatility was not principally a macro event triggered by new Fed Chair Kevin Warsh's hawkish stance, but rather "the AI investment theme starting to rebalance from the inside". Wilson pointed to crowded hedge fund positions in semiconductor stocks — Goldman's own data showed funds entered the second quarter of 2026 with the highest-ever portfolio weight in semiconductors at 10%, after increasing technology sector exposure by 853 basis points, the largest quarterly jump on record.bitget+2

The rebalancing reflects markets beginning to distinguish between AI winners and losers — separating "the builders from the beneficiaries, the scarce from the abundant," as the Goldman note characterized it.thedarksideoftheboom.substack

Wider Fallout

The turmoil extended well beyond Seoul. Microsoft ↗ 0.90%, the worst-performing member of the so-called Magnificent Seven in 2026, has fallen roughly 24% year-to-date and traded near its 52-week low. The Kospi recorded 20 daily moves of at least 5% in 2026, compared with just two such occasions in all of 2025, underscoring how the AI semiconductor supercycle has transformed Korea's market into one of the world's most volatile — even as it remains classified as an emerging market by MSCI ↗ 2.17%, which this week declined to upgrade its status.cnbc+3