The bank downgraded South Korea to neutral even as it kept the market in its preferred allocation list, after a sharp KOSPI slide driven by unwinding in AI-related positions.
Citigroup cut South Korea to neutral from overweight as volatility in chip stocks and a sharp unwind in AI-related positions deepened pressure on the KOSPI. South Korea’s benchmark index fell 5%, extending a four-week losing streak and leaving it 28% below its June 22 record high. Citi analysts said Korea remains a preferred market in their allocation model, but persistent volatility prompted the downgrade while they kept a 10,000 target for the KOSPI. The move reinforces the bank’s more cautious stance after earlier concerns about strong gains in the market, retail demand for single-stock leveraged ETFs and valuation risks, while still reflecting a selective rather than broad retreat from AI-linked exposure.