Foreign and institutional investors are leading a year-end Santa rally by simultaneously injecting large-scale funds into the Korean stock market, while retail investors take profits.
As institutions and foreigners absorb selling pressure from retail investors during the index correction phase, market attention is shifting back to large-cap semiconductor stocks.
According to Korea Exchange data on Thursday, institutions maintained net buying positions on KOSPI for five consecutive trading days from December 19 through Thursday, while foreign investors also posted net purchases for four straight trading days from December 22.
Between December 19 and 26, institutions and foreign investors net purchased 3.4 trillion won ($2.5 billion) and 3.6 trillion won ($2.6 billion), respectively. Retail investors, in contrast, sold 7 trillion won ($5.1 billion) worth of shares during the same period.
Buoyed by this buying momentum, KOSPI rose 3.38% during the period, securing upward momentum.
Analysts note that as concerns over an "artificial intelligence bubble" and global volatility that weighed on the market through early to mid-December have somewhat subsided, investors are now looking ahead to next year.
"While a wait-and-see approach may continue for a while amid thin trading volume, investor deposits—funds waiting on the sidelines—remain at a high level of around 80 trillion won, suggesting sufficient positive sentiment and room for further gains in the domestic market," said Lim Jung-eun, a researcher at KB Securities.
The concentration in large-cap stocks is evident in the top net purchase list. Between December 19 and 26, institutions net purchased Samsung Electronics (005930.KS) at 1.37 trillion won, SK hynix (000660.KS) at 1.31 trillion won, Samsung Electronics preferred shares (005935.KS) at 85.7 billion won, and SK Square (402340.KS) at 81.3 billion won.
Foreign investors' top net purchases during the same period were Samsung Electronics at 1.99 trillion won, SK hynix at 1.45 trillion won, Samsung Electronics preferred at 122.4 billion won, and Kakao (035720.KS) at 94.1 billion won.
Retail investors showed a contrasting pattern, net selling Samsung Electronics at 3.35 trillion won, SK hynix at 2.75 trillion won, and Samsung Electronics preferred at 209 billion won.
If expectations for the won-dollar exchange rate to stabilize downward grow, foreign investor supply pressure could ease, likely extending the upward trend centered on large-cap stocks, analysts say.
The market is focused on the December Federal Open Market Committee meeting minutes to be released on December 31.
"If the minutes provide clues about the future rate cut path and highlight discussions on short-term Treasury purchases or ending quantitative tightening, expectations for next year's liquidity environment could rise significantly," said Jung Hae-chang, a researcher at Daishin Securities.
