Goldman Sachs: Deleveraging in Tech Stocks Nearing End, Short-Term Lacks Reversal Catalysts

Goldman Sachs partner Mark Wilson stated that the current momentum trading sell-off has lasted for 17 trading days, with the momentum factor in U.S. stocks retreating 28% from its peak. The momentum factors in technology, media, and telecommunications have seen declines of 40%, marking the fastest and deepest retreat on record. The KOSPI has fallen 27% from its high, U.S. AI beneficiary stocks have retreated about 25%, global memory chip stocks are down 36%, and European semiconductors have dropped 23%. According to Goldman Sachs data, the volatility of high-beta momentum portfolios is about 10 times that of the S&P 500 index, with the average implied volatility of individual stocks reaching 2.8 times that of the index. Wilson believes that this round of sell-off is primarily due to crowded positions, concentrated leverage, and deleveraging, rather than a deterioration in macroeconomic conditions or corporate earnings. U.S. banking loans and consumer data continue to grow, and TSMC and ASML have also released positive business signals, yet related stocks still fell after earnings reports. He believes that the unwinding process of momentum factors is nearing its end, but in the short term, there is still a lack of catalysts to immediately reverse the market. Valuations in the tech sector remain high, and new leading directions may need to wait for further clarification after the second-quarter earnings reports are digested.

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