Foreign investors resumed purchasing Samsung Electronics and SK Hynix shares during the five trading days from the 14th to the 21st, after selling over 190 trillion won in Korean stocks year-to-date through the 13th. According to the Korea Exchange on the 22nd, foreign investors net purchased 3.4 trillion won in the KOSPI market over this period, with SK Hynix accounting for 1.6 trillion won and Samsung Electronics for 900 billion won. Securities firms attribute the shift to the completion of mechanical selling pressure tied to MSCI Emerging Markets index weight reductions, which lowered Samsung's index weight from 9.5% to 7.5% and SK Hynix's from 8.3% to 5.7% following recent stock price corrections.
Foreign Investors Net Purchase 3.4 Trillion Won in Samsung and SK Hynix Over Five Days
Foreign investors net purchased 1.9 trillion won on the 14th and 2.5 trillion won on the 15th in the KOSPI market. They switched to net selling of over 2 trillion won on the 16th, then returned to net buying of 200 billion won on the 20th and 700 billion won on the 21st. SK Hynix and Samsung Electronics were the most heavily purchased stocks during this period, with SK Hynix receiving 1.6 trillion won in net purchases and Samsung Electronics 900 billion won.
MSCI Index Weight Adjustments Drive 193 Trillion Won Year-to-Date Selloff
Foreign investors sold 193 trillion won in the KOSPI market from the beginning of the year through the 13th. Samsung Electronics accounted for 88.7957 trillion won of the selling, while SK Hynix accounted for 74.2947 trillion won. JP Morgan analyzed that the core reason for the large-scale selling was that Samsung Electronics and SK Hynix exceeded their inclusion limits in the MSCI Emerging Markets index as their market capitalizations surged. Approximately 90% of this year's foreign net selling concentrated on these two stocks. This month, Samsung's weight in the MSCI Emerging Markets index fell from 9.5% to 7.5%, and SK Hynix's weight dropped from 8.3% to 5.7% following sharp corrections in both stocks. Mixo Das, JP Morgan's Korea equity strategy head, stated: "Foreign investors have net sold over $110 billion in the Korean stock market this year, which is likely to become the largest annual capital outflow in Asian stock market history. However, mechanical selling pressure is gradually easing due to recent corrections in the Korean stock market and memory semiconductor stocks."
Analysts Forecast KOSPI Rebound from Late July
IBK Securities projected that foreign investor demand is likely to improve in the short term. Byun Jun-ho, a researcher at IBK Securities, stated: "As the market has largely priced in negative factors such as AI and semiconductor peak-out concerns and Middle East geopolitical risks, the scale of future foreign selling is likely to gradually decrease. KOSPI will enter a rebound phase from late July after digesting US big tech earnings and the Federal Open Market Committee meeting." Byun explained that when recent 60-day foreign net selling is converted to a ratio against market capitalization, it represents a rare oversold zone except during the financial crisis and COVID-19 crisis, and historically after such short-term selling levels, foreign selling momentum has slowed and KOSPI has rebounded. However, the possibility of renewed foreign profit-taking selling remains, and analysts advise continuous monitoring of demand changes during any index rebound, as variables including economic slowdown concerns, potential dollar strength, and slowing AI investment growth rates persist.
FAQ
Q: How much did foreign investors purchase in Samsung Electronics and SK Hynix from the 14th to the 21st?
A: According to the Korea Exchange on the 22nd, foreign investors net purchased 3.4 trillion won in the KOSPI market over the five trading days from the 14th to the 21st, with SK Hynix accounting for 1.6 trillion won and Samsung Electronics for 900 billion won.
Q: Why did foreign investors sell 193 trillion won in Korean stocks year-to-date through the 13th?
A: JP Morgan analyzed that Samsung Electronics and SK Hynix exceeded their inclusion limits in the MSCI Emerging Markets index as their market capitalizations surged, forcing mechanical selling. Approximately 90% of this year's foreign net selling of 193 trillion won concentrated on these two stocks, with Samsung accounting for 88.7957 trillion won and SK Hynix for 74.2947 trillion won.
Q: What do analysts forecast for KOSPI movement from late July?
A: Byun Jun-ho of IBK Securities stated that KOSPI will enter a rebound phase from late July after digesting US big tech earnings and the Federal Open Market Committee meeting, as the market has largely priced in negative factors and the scale of future foreign selling is likely to gradually decrease.
