Korean Stocks Fall 18.4% as Retail Buying Slows and Foreign Selling Surges

The KOSPI market experienced an 18.4% decline from its peak of 9372.61 on 지난달 19일 to 7647.63 by 7월 11일, breaking a months-long pattern where retail investors absorbed foreign selling. From 1~2월, the KOSPI surged from 4000 to over 6000, and from 4~6월 it broke 9000, supported by retail buying as foreigners sold. The decline occurred as foreign selling accelerated to 6.2 trillion won in 7월 1~11일 compared to 1.89 trillion won in 6월, while retail buying slowed from 7.2 trillion won in 6월 to 4.5 trillion won in 7월 1~11일. Analysts attribute the shift to valuation concerns and weakening retail sentiment after months of sustained buying.

Foreign Selling Accelerates While Retail Buying Slows in 7월

Foreign investors sold 6.2 trillion won of Korean stocks from 7월 1일 to 11일, more than triple the 1.89 trillion won sold in 6월. During the same 7월 period, retail investors purchased 4.5 trillion won, down from 7.2 trillion won in 6월. The supply-demand imbalance intensified as retail buying failed to offset the increased foreign selling pressure. From 1~2월 through 6월, retail investors had consistently absorbed foreign outflows, enabling the KOSPI to climb from 4000 to over 9000. The pattern reversed after 지난달 19일, when the index peaked at 9372.61 before declining 18.4% to 7647.63 by 7월 11일.

Analysts Cite Valuation Concerns and Sentiment Shift

Lee Kyung-min, an analyst at Daishin Securities, stated that "the KOSPI index rose too quickly and valuations became burdensome." Seo Sang-young, an analyst at Mirae Asset Securities, noted that "retail investors, who had been the main buyers, are showing signs of exhaustion, and sentiment is not good." Both analysts pointed to the rapid index appreciation from 4000 in 1~2월 to over 9000 in 4~6월 as a factor contributing to valuation pressure. The shift in retail buying behavior from 7.2 trillion won in 6월 to 4.5 trillion won in 7월 1~11일 reflects the sentiment change cited by Seo.

FAQ

What caused the KOSPI to fall 18.4% from its peak in 지난달? The KOSPI declined 18.4% from 9372.61 on 지난달 19일 to 7647.63 by 7월 11일 as foreign selling accelerated to 6.2 trillion won in 7월 1~11일 from 1.89 trillion won in 6월, while retail buying slowed from 7.2 trillion won in 6월 to 4.5 trillion won in 7월 1~11일.

Why did retail investors reduce their buying in 7월? Analysts Lee Kyung-min of Daishin Securities and Seo Sang-young of Mirae Asset Securities attributed the slowdown to valuation concerns after the KOSPI's rapid rise from 4000 in 1~2월 to over 9000 in 4~6월, and to weakening sentiment among retail investors who had sustained buying for months.