Foreign investors sold 158.6414 trillion won in the Korean KOSPI stock market cumulatively this year through July 6, yet the index maintained the 8000 level as individual investors and exchange-traded funds (ETFs) absorbed the selloff. On July 6, foreign investors sold 1.3338 trillion won worth of shares in the securities market, marking the 12th consecutive trading day of net selling since June 19, while individual investors bought 2.6461 trillion won worth. The KOSPI closed at 8051.33 on July 6, down 0.46% from the previous trading day. Market participants attribute the index's resilience to a structural shift in liquidity, with domestic capital—including large-scale individual buying, ETF inflows, retirement funds, and corporate share buybacks—offsetting foreign outflows. The won-dollar exchange rate exceeded 1500 won this year, amplifying foreign selling pressure as currency weakness created additional capital outflow momentum.
Individual Investors Purchase 65.565 Trillion Won in ETFs from January to July 6
Individual investors bought 65.565 trillion won worth of ETFs from January to July 6, according to the Korea Exchange. During the same period, foreign investors bought only 6.5276 trillion won worth of ETFs, while institutional investors sold 74.5112 trillion won worth. From June to July 6, as foreign selling intensified, individual ETF purchases reached 17.8996 trillion won. The KOSDAQ index closed at 847.07 on July 6, down 2.46%.
Won-Dollar Exchange Rate Exceeds 1500 Won, Amplifying Foreign Selling Pressure
The won-dollar exchange rate exceeded 1500 won this year, contributing to expanded foreign selling. Capital outflows created additional upward pressure on the exchange rate. Market participants view exchange rate stabilization and corporate earnings improvement as factors that will determine foreign capital's return to Korean stocks.
Analysts Project Continued Foreign Selling and Cite Corporate Earnings as Key Factor
Moon Da-woon, a researcher at Korea Investment & Securities, stated, "It is difficult to expect foreign investors to turn to net buying of domestic stocks in the second half of the year. This is an inevitable reaction that appeared during the KOSPI's rapid rise." Oh Jae-young, a researcher at KB Securities, analyzed, "In the past, foreign ownership in the KOSPI ranged from 29% to 45%, excluding the 2009 global financial crisis. Assuming the current foreign ownership ratio falls to 35%, approximately 260 trillion won of additional selling is possible." Oh added, "As the stock market rises, foreign rebalancing demand also increases, which could lead to continued selling."
Noh Dong-gil, a researcher at Shinhan Investment & Securities, stated, "Earnings per share (EPS) revisions must resume during the domestic earnings season in July, and concerns about capital expenditures (CAPEX) must ease with big tech earnings in early August to justify increasing the weight of leading stocks. In an environment where high exchange rates continue, profit growth and expanded shareholder returns will be key factors in attracting foreign capital again."
FAQ
Q: How much did foreign investors sell in Korean stocks from January to July 6?
A: Foreign investors sold 158.6414 trillion won cumulatively in the KOSPI from January through July 6, including 1.3338 trillion won on July 6 alone, marking the 12th consecutive trading day of net selling since June 19.
Q: How did individual investors respond to foreign selling in Korean stocks?
A: Individual investors bought 65.565 trillion won worth of ETFs from January to July 6, with 17.8996 trillion won purchased from June to July 6 as foreign selling intensified. On July 6, individual investors bought 2.6461 trillion won worth of shares, offsetting foreign outflows.
Q: What factors do analysts cite as necessary for foreign capital to return to Korean stocks?
A: Analysts cite exchange rate stabilization, corporate earnings improvement, resumption of earnings per share (EPS) revisions in July, easing of capital expenditure concerns in big tech earnings in early August, profit growth, and expanded shareholder returns as key factors for attracting foreign capital back to Korean stocks.
