KOSPI Plunges 6% as Foreigners Sell 20 Trillion Won This Month

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an AI-based customized news recommendation and summarization service developed with support from the Korea Press Foundation. It selects and provides six tailored news items for each reader type.

1. Rate Cut Hopes Fade — Foreigners Sell 20 Trillion Won This Month Amid Soaring Exchange Rate

- Key Summary: Concerns over escalation of the Middle East war pushed WTI above $100, and the KOSPI plunged 6.49% to close at 5,405.75. The won-dollar exchange rate surged to 1,517.3 won, up approximately 6% from pre-war levels, and foreigners net sold 20.2784 trillion won this month alone. Profit-taking was concentrated in large-cap stocks including Samsung Electronics (005930.KS) (-6.57%) and SK hynix (000660.KS) (-7.35%), while the VKOSPI spiked back above 60 to 62.80. Kim Hak-gyun, head of the research center at Shinyoung Securities (001720.KS), forecast that a volatile market with repeated sharp swings would continue as oil prices and interest rate trajectories remain intertwined.

2. Middle East Oil Shock Triggers 'Bear Flattening' — "Case for Rate Hike Has Strengthened"

- Key Summary: Surging oil prices and inflation concerns pushed the three-year Korea Treasury bond yield to 3.617%, its highest since November 2023. A pronounced "bear flattening" pattern — where short-term yields rise faster than long-term yields — signals that monetary tightening expectations are being priced in. According to DBS, South Korea's net fuel imports account for 6.5% of GDP, higher than Japan (3.1%) and Taiwan (4.2%), making it more vulnerable to oil price shocks. Hanwha Investment & Securities said that if the Middle East situation becomes prolonged, the BOK would have justification to raise rates at least once in the first half.

3. Treasury Share Cancellations Accelerate — More Than 200 Companies This Year

- Key Summary: The number of listed companies announcing treasury share cancellations this year has surpassed 200, with the total cancellation volume reaching approximately 46 trillion won, already exceeding the full-year record. Under the third amendment to the Commercial Act, newly acquired treasury shares must be cancelled within one year and existing holdings within 18 months, prompting holding companies such as SK (034730.KS) and Samsung C&T (028260.KS) to move preemptively. According to Heungkuk Securities, cancelling 20% of treasury shares would boost EPS by 25% and BPS by 20%, and factoring in a reduced governance discount, upside potential could expand by more than 35%. Forecasts suggest cancellation disclosures will increase further in the second half, with total cancellations potentially reaching 60 trillion won this year.

4. 8,300 RIA Accounts Opened on Day One — Brokerages Compete Fiercely for 'Salmon Retail Investors'

- Key Summary: The Reverse Investment Account (RIA), which offers a 50–100% capital gains tax reduction when overseas stock sale proceeds are reinvested domestically, saw 8,308 accounts opened across seven major brokerages on its first day. The average deposit per account was around 100 million won. Brokerages are engaged in aggressive marketing — offering commission waivers, gold bar raffles, and cash incentives — to attract subscribers. The mandatory one-year domestic stock holding requirement is expected to create a "lock-in effect" that shifts short-term speculative flows toward medium- to long-term investment. With the exchange rate above 1,500 won, the repatriation of overseas funds could also help stabilize the currency, analysts say.

5. "Signal for Korea Rate Hike Could Come as Early as May"

- Key Summary: Citi projected that a rate hike signal could emerge at the May 28 Monetary Policy Committee meeting chaired by BOK governor candidate Shin Hyun-song. Citi forecasts the BOK will raise rates by 0.25 percentage points each in July and October this year, and said Shin's nomination reinforces this outlook. Barclays also noted that Shin is likely to emphasize inflation targeting while taking a cautious stance on financial imbalances. However, the view that responding to supply-side inflation with rate hikes requires caution also persists.

6. The Hidden Risk in Stock Investing: 'Factors'

- Key Summary: Factor risk refers to a portfolio's excessive exposure to specific investment factors such as value, growth, momentum, and low volatility. The rotation cycle of dominant styles has shortened sharply from an average of 796 days during 2010–2015 to 233 days over the past five years, increasing the danger of style concentration. In the U.S. market, combining value opportunities in the financial and industrial sectors with growth factors in communication and healthcare has proven effective for diversifying style risk. Analysis suggests that stock selection based on corporate fundamentals and multi-layered risk management are key to navigating volatile markets.