Foreign investors' share of South Korea's main bourse has surged to its highest level in about six years, as a recently opened direct trading channel for overseas retail investors fuels large-scale net buying. A semiconductor-led rally in market leaders remains firmly intact, while gains are quickly broadening into information technology (IT) and heavy industry, strengthening the index's overall foundation.
The KOSPI closed Thursday at 7,384.56, up 447.57 points, or 6.45%, from the previous session, marking a record high for the second consecutive trading day, according to the Korea Exchange. After breaking through the 6,800 and 6,900 lines in a single session on the 4th of this month, the benchmark extended its momentum with another 6%-range surge to vault past the 7,000 mark. Retail investors and institutional investors sold 576 billion won and 2.31 trillion won worth of shares respectively to lock in profits, while foreign investors led the rally with net purchases of 3.13 trillion won.
Since the KOSPI reclaimed the 6,000 line on November 15, the index has soared roughly 24% to the 7,300 range in just 13 trading sessions, with bellwethers Samsung Electronics (005930.KS, up 26.06%) and SK hynix (000660.KQ, up 40.93%) playing leading roles. Gains have also spread across the broader artificial intelligence (AI) and semiconductor ecosystem, including Samsung SDI, LG Innotek and SK Square, pushing the KOSPI 200 Information Technology Index's return (43.73%) above those of Samsung Electronics and SK hynix. Over the same period, the KOSPI 200 Heavy Industry Index also jumped 26.45%, reflecting expanded power infrastructure investment and reconstruction demand.
The KOSPI's total market capitalization topped 6,000 trillion won for the first time on Thursday, with foreign-held market cap reaching 2,356.23 trillion won ($1.73 trillion). Foreign-held market cap first crossed the 2,000 trillion won mark on November 23 and has since added about 350 trillion won in just seven trading sessions. Foreigners' share of the overall KOSPI rose to 38.90%, up more than 7 percentage points over the past year and the highest level since March 4, 2020 (38.92%).
The pace of foreign inflows this year has outstripped the index's rise. Foreign-held market cap on the main bourse has grown 86.74% year to date, topping the KOSPI's 75.23% gain over the same period. In just two trading sessions this month, foreigners recorded combined net purchases of more than 6 trillion won, and over the past week they bought 4.91 trillion won and 1.91 trillion won worth of Samsung Electronics and SK hynix respectively. Concentrated buying in the electrical and electronics sector, anchored by large-cap chipmakers, is driving the index higher.
Analysts see foreign buying as more than a short-term event and expect it to feed into a medium- to long-term tailwind. "There is still plenty of room for foreign capital to come in, so supply-demand momentum will remain positive through year-end," said Kang Dae-kwon, chief executive of Life Asset Management. "If the chip-led rally in market leaders continues, the KOSPI could break through the 8,000 line within May."
A key catalyst is Samsung Securities' partnership with Interactive Brokers (IBKR), which has about 4.6 million global investor accounts, to offer an omnibus account service for foreign investors. With the service fully opened following a January revision to financial investment business regulations, overseas investors can now trade Korean stocks without opening separate domestic accounts. Foreign investors had previously relied on indirect exposure through U.S.-listed products such as the iShares MSCI Korea ETF (EWY), but direct trading on the Korean market is now possible, raising expectations for a broader investor base. Such investors are generally known for their long-term orientation.
The omnibus account service is currently being piloted by Samsung Securities and Hana Securities, with six other brokerages — Yuanta, Meritz, Mirae Asset, Shinhan Investment, NH Investment and KB Securities — preparing to roll out the offering. "With this regulatory overhaul, non-resident foreign retail demand will also flow in, diversifying the investor base," said Yoon Yoo-dong, a research analyst at NH Investment & Securities. "Streamlined trading procedures will expand global liquidity and further energize the capital market."
On top of foreign inflows, rapid growth in the domestic exchange-traded fund (ETF) market is another pillar supporting the rally. As the KOSPI breached the 7,000 line on Thursday, the domestic ETF market capitalization stood at about 453 trillion won, or 6.7% of the entire stock market. Total net assets, which topped 400 trillion won in mid-November, are projected to exceed 450 trillion won in just over 20 days. ETF inflows tied to the index's advance and reinvestment driven by those inflows are forming a virtuous cycle that expands market liquidity, market participants said.
In the 8,000-point era, the star may not be semiconductors — investors unfamiliar with "this stock" risk being left behind.
