Foreign Investors Dump 5 Trillion Won as KOSPI Plunges After Topping 8,000

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

1. KOSPI Touches 8,000 on Semiconductors and Physical AI, Tripped Up by Profit-Taking and Foreign Selling

- Key Summary: The KOSPI rose to 8,046.78 in early trading on the 15th, marking the first-ever breach of the 8,000 level, but reversed course and closed at 7,493.18, down 488.23 points or 6.12% from the previous day. Foreign investors net sold 5.6128 trillion won and institutions net sold 1.7334 trillion won, while individuals stepped in with the largest net buying on record, but it was not enough. Meanwhile, as investor sentiment rapidly spread to Physical AI (artificial intelligence linked to physical environments such as robots and autonomous driving) related stocks, LG Electronics rose 10.83% alone on the day while all top 30 stocks by market capitalization declined. As of the 12th of this month, investor deposits hit a record high of 137.4174 trillion won, and the balance of margin loans and the balance of stock lending transactions, a leading indicator of short selling, also approached record-high levels.

2. "Suppress the Urge to Chase the Bull Market…Hold Leading Stocks and Diversify Risk with ETFs"

- Key Summary: As the KOSPI surged 73.9% from 4,309.63 in January this year to 7,493.18 on May 15, FOMO (Fear of Missing Out) investors are increasingly grappling with whether to enter the market. Heads of major securities firms' research centers presented investing in leading stocks, diversification through ETFs, and rotation into laggard sectors as their core strategies. Shin Joong-ho, head of LS Securities (078020) Research Center, said, "The AI investment cycle is still driving the market, so in this kind of market, you actually need to hold leading stocks until the end." Along with advice that a "barbell strategy" combining semiconductor, power, and AI infrastructure ETFs with high-dividend and value stocks remains effective, caution prevails regarding short-term directional investments such as leverage ETFs.

3. 'Fee Competition' Spreads to Samsung-Hynix Leverage ETFs…Will Market Volatility Rise?

- Key Summary: With the total net assets of the domestic ETF market reaching 478.43 trillion won as of the 14th, 16 single-stock leverage and inverse ETFs tracking Samsung Electronics and SK hynix will list simultaneously on the 27th of this month. Six asset managers, including Samsung Asset Management, Mirae Asset Global Investments, and Korea Investment Trust Management, are engaged in fierce fee competition with total fees ranging from 0.09% to 0.29% per year. Meanwhile, semiconductor ETF net assets surged about fivefold from 8.9646 trillion won at the end of last year to 41.7038 trillion won, and in the United States, Roundhill's memory ETF (DRAM) has attracted approximately $9 billion (about 13 trillion won) in assets, showing signs of overheating in semiconductor ETFs. Kang Song-cheol, a researcher at Eugene Investment & Securities (001200), said, "We need to watch whether fund inflows overheat after the listing of single-stock leverage ETFs for Samsung Electronics and SK hynix."

4. Principal Protection with 4%+α Annual Return…IMA for Those Seeking Safe Assets

- Key Summary: Korea Investment & Securities and Mirae Asset Securities are scheduled to launch new Integrated Management Account (IMA) products this month, with IMAs guaranteeing principal repayment obligations and a 4% benchmark annual return while also providing additional returns based on management performance. Korea Investment & Securities has raised a cumulative 2.4 trillion won through its fourth issue, and Mirae Asset Securities' first issue recorded an annualized return of approximately 5.77% as of the 9th of last month. However, if 200 million won is managed for three years at a 4% annual return, approximately 24 million won in profits would be generated at maturity all at once, potentially making it subject to comprehensive financial income taxation (a maximum tax rate of 49.5% applied when annual financial income exceeds 20 million won), so investors should review tax implications in advance. Accordingly, the industry is pushing for regulatory improvements to launch "interim distribution" products that pay out returns annually.