Foreign Investors Sell More Than 20 Trillion Won in KOSPI Shares

Over the past month, foreign investors have sold over 20 trillion won worth of shares on the Korean KOSPI index, significantly reducing their stake in the domestic market. According to the Korea Exchange and Yonhap Infomax, foreign investors experienced net sales of 20.31 trillion won, or about $15.10 billion, from September 1 to October 2.

Selling pressure was relentless, with foreign investors buying only on seven out of 22 trading days during this period. On September 28 alone, more than 3 trillion won of shares were sold in a single day. Consequently, foreign investors' share of KOSPI market capitalization has fallen to 39.66%. The selling has primarily targeted large-cap semiconductor stocks, with foreign investors net selling 12.01 trillion won of SK hynix and 5.19 trillion won of Samsung Electronics, reducing their ownership ratios to 49.76% and 46.40%, respectively.

The primary reason for this sell-off is attributed to sustained profit-taking following a strong rally in semiconductor share prices during the first half of the year. External factors, such as worries about a prolonged US-Iran conflict and rising interest rates, have also contributed to investor sentiment. However, the pace of selling has slightly eased this month, with net buying of 243 billion won on October 1 and only around 190 billion won on the following day.

The securities industry views this as a positive sign, indicating that supply-demand conditions may normalize once long-term interest rates stabilize. The return of foreign capital will depend on the visibility of third-quarter earnings. A strong showing by Micron Technology and Samsung Electronics' preliminary earnings release, expected on October 8, could provide encouragement for future fund flows.