A historic wave of "Sell Korea" continues as foreign investors have offloaded more than 51 trillion won ($36 billion) from the domestic stock market since February alone, driven by prolonged Middle East risks, a sharp rise in the exchange rate, and accumulated profit-taking.
Some market participants warn that further selling is likely given foreigners' still-elevated holdings, while others argue that relative to total market capitalization the sell-off is modest — and that depleted foreign positioning could serve as a springboard when the index rebounds.
According to Korea Exchange (KRX) data released on the 27th, foreign investors have been net sellers for seven consecutive trading days since the 19th. Including the 3.8882 trillion won they dumped on the KOSPI market that day alone, foreigners have net-sold a total of 30.3827 trillion won in March. Cumulative net selling since February has reached 51.4557 trillion won. Retail investors, meanwhile, absorbed the entire volume, purchasing 30.6878 trillion won over the same period.
Analysts say the extreme foreign selling is the result of multiple converging factors. On top of fears over a prolonged Middle East war, the KOSPI's 75.63% surge last year and an additional 29.06% jump early this year stoked profit-taking appetite, which was further amplified by a rapid rise in the exchange rate.
Some brokerages see room for additional foreign selling. Foreigners' ownership ratio on the main KOSPI market stood at 36.98% as of that day, actually higher than the 32.6% recorded a year earlier. "The recent selling is largely mechanical portfolio rebalancing and profit-taking on gains accumulated since January," said Baek Young-chan, head of the research center at Sangsangin Securities. "But because foreign investors are most averse to uncertainty, they could continue selling until a positive catalyst emerges."
On the other side, some argue that the record headline figure needs context. With the KOSPI's total market capitalization having swelled to more than 4,000 trillion won, the absolute selling amount alone should not be used to overstate the market impact, they contend. "If you calculate foreign net selling as a share of total KOSPI market capitalization, the current March reading is about negative 1.1% — the lowest on record except for the negative 6.0% during the 2008 global financial crisis," said Han Ji-young, a researcher at Kiwoom Securities (039490.KQ).
With foreign ownership ratios relatively low and the index defending support around the 5,400 level, observers say additional upside potential has actually grown if the Middle East situation is resolved and foreigners return. Indeed, foreign ownership in Korea's leading stocks is approaching trough levels. Samsung Electronics' (005930.KS) foreign ownership stood at 49.1% as of the 26th, its lowest in a decade. SK hynix (000660.KS) also shows notably low foreign ownership compared with the period since 2024, when it emerged as the leading high-bandwidth memory (HBM) play.
Experts say that as no fundamental damage has struck the KOSPI's underlying health, depleted foreign positioning could act as a powerful trigger for a rebound. "As long as the major macro headwinds currently weighing on the market — war risks, TurboQuant shock, and the possibility of U.S. Federal Reserve rate hikes — do not deteriorate further from here, the incentive for foreigners' mechanical position reduction and profit-taking is bound to diminish," Han said.
