Foreign investors have net sold Korean shares for 18 consecutive trading sessions, halting the KOSPI's rally. Their cumulative net selling this year has surpassed 103 trillion won, exceeding the scale of any past crisis.
Sharp 2.7% Reversal After Record High
According to the Korea Exchange on Tuesday, the KOSPI opened the session at 8,883.19, setting a new all-time high, and soared as high as 8,933.62, breaking through the 8,900 level for the first time. The upward momentum, however, soon reversed.
"Volatility expanded as some recently surging stocks related to physical AI and circuit boards declined," said Kim Seok-hwan, an analyst at Mirae Asset Securities (006800.KS). "Profit-taking pressure emerged."
Foreign investors have continued their net selling streak on the KOSPI for 18 trading sessions, from November 7 through Tuesday. According to Korea Exchange data, their net selling from November 7 through Monday reached 53.5981 trillion won.
Surpassing 103 Trillion Won, Eclipsing Financial Crisis and Pandemic
The figures swell more sharply when the time frame is broadened to the full year. Year-to-date through Monday, foreign investors' cumulative net selling on the KOSPI totaled 103.2497 trillion won. The amount exceeds both the 62 trillion won recorded during the 2007-2008 financial crisis and the 25 trillion won seen during the 2020 COVID-19 pandemic.
While fears spread through the market over the record-largest net selling, experts interpret the move as mechanical rebalancing rather than an exodus. The prevailing view is that overseas funds, whose exposure to specific countries and sectors has grown amid the strength of Korean equities and the semiconductor sector, are automatically disposing of KOSPI shares to restore portfolio balance.
"Foreign investors' net selling is driven by rebalancing, not by an intention to sell off Korean stocks and leave," said Lee Kyoung-min, head of FICC Research at Daishin Securities (003540.KS). "In fact, foreign investors' holding ratio of domestic stocks has actually increased."
According to FnGuide data, foreign investors' KOSPI holding ratio stood at 40.26 percent as of Monday. That marks a 4 percentage point gain from 36.26 percent at the end of last year. The fact that the holding ratio has risen even as foreigners sold large volumes of stock is attributed to the increase in the market value of their existing holdings outpacing their selling amounts.
"Considering the expanded KOSPI market capitalization, the current scale of foreign net selling is not large compared to the past," said Kim Jae-seung, an analyst at Hyundai Motor Securities (001500.KS). "Foreign net selling is at a record high in absolute size, but as a proportion of KOSPI market capitalization, it is smaller than the foreign net selling seen between 2020 and 2022."
He added, "From a global perspective, foreign investors are maintaining a positive view on the Korean market and the memory semiconductor sector. We should keep in mind that if KOSPI overheating signals ease and the macro environment improves, foreign net buying could expand again, as it did in April."
Jensen Hwang's Second 'Kkanbu' Meeting: What Is the Purpose of Joining Hands With Korean Companies?
