Goldman Sachs: Information Technology Stocks See Biggest Sell-Off in a Decade, Selling Pressure May Be Nearing Exhaustion

TechFlow news, according to Chaoxiang Research, Goldman Sachs' August 3 position tracking report shows that global information technology stocks saw the largest long selling volume last week since 2014, with the total selling volume over two consecutive days being the second highest in nearly a decade. Hedge funds' gross leverage gave back half of the year's gains, and net leverage turned negative year-to-date. Retail margin balances in South Korea and Japan began to reverse after reaching historical extreme levels, and US retail investors are also reducing holdings of semiconductor stocks. VIX futures speculative net shorts have basically been cleared out.

Goldman Sachs believes that the intensity of deleveraging may have peaked, but the inertia of capital outflows continues. Individual stock implied volatility rose to the highest level since 2020, index correlation fell to low levels, and the market is shifting from trading the AI sector as a whole to differentiated pricing of individual stocks. Bond funds and money market funds are the main drivers of capital inflows this year; equity funds saw an inflow of $34 billion in July, with an absolute scale far smaller than that of the bond market. Goldman Sachs judges that the stock selection environment is improving, but sector beta trading still faces pressure.