Foreign Investors Dump 135 Trillion Won in Five Months, Targeting Samsung and SK hynix

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

1. Foreign Investors Sell Another 21.5 Trillion Won in September, Starting With Samsung and SK hynix

Key summary: Foreign investors sold a net 21.51 trillion won worth of KOSPI shares in September, extending their selling streak to a fifth consecutive month and lifting cumulative net selling over that period to 134.92 trillion won. SK hynix (11.58 trillion won) and Samsung Electronics (4.89 trillion won) accounted for 76.6% of the total, and analysts say the structure has become entrenched: with the two stocks making up more than 50.85% of KOSPI market capitalization, selling tends to concentrate in them whenever foreign investors trim their exposure to Korean equities. By contrast, SK Square (723.8 billion won), Woori Financial Group (473.7 billion won) and Korean Air (294.4 billion won) drew net buying. Brokerages say a shift to net buying by foreign investors would require not only confirmation of strong results but also upward revisions of more than 2% to next year's earnings forecasts, and whether U.S. inflation and employment data in October ease concerns about further tightening has emerged as another key variable.

2. Even a 700 Trillion Won AI Boost Falls Short as KOSPI Drops for Third Session Since Chuseok

Key summary: Semiconductor shares opened higher on the 700 trillion won, 10-year AI infrastructure spending plan contained in Anthropic's IPO prospectus, but the KOSPI closed down 0.48% as foreign investors and institutions sold in tandem, marking a third straight decline since the Chuseok holiday. Samsung Electronics rose as high as 276,000 won during the session before ending 1.47% lower at 268,500 won, while SK hynix gave back most of its gains to finish up just 0.62%. Net selling by foreign investors and institutions in the two chip stocks reached 2.06 trillion won on the day alone. The KOSDAQ held up relatively well with a 0.72% gain, and market participants said the U.S. PCE price index and Micron's earnings have emerged as the key variables determining the index's direction.

3. U.S. August PCE Rises 3.4% From a Year Earlier, Below Forecasts

Key summary: The U.S. PCE price index for August rose 3.4% on a headline basis and 3.0% at the core level, far below market forecasts of 3.7% and 3.3%, respectively. The figures reflect the Bureau of Economic Analysis' revision to how it measures costs for software, investment management and legal services, applied for the first time in this release, and economists estimate the new methodology lowers the core PCE growth rate by 0.2 percentage point compared with the previous approach. Consumer spending rose 0.9% from the prior month, a steeper increase than July's 0.1%, and the final reading of second-quarter GDP was revised up to an annualized 2.2% from the preliminary 1.5%. With the data coming in lower than expected, market expectations shifted away from an October Federal Reserve hike toward December, which analysts said could translate into hopes for reduced rate pressure on domestic equities.

4. Fed's No. 2 Says a Hike Is Not Imminent, Strengthening Case for October Hold

Key summary: New York Federal Reserve President John Williams mentioned the possibility of an additional rate increase this year but ruled out an October move, saying there was no longer any need to rush. Immediately after his remarks, the probability of an October hike priced into the federal funds futures market plunged from about 70% to around 50%. The September consumer confidence index came in at 81.9, far below the expert forecast of 89.0 and the lowest level since April 2014, while August job openings of 7.079 million also fell short of the market forecast of 7.225 million. With slowing consumption and employment converging, momentum built for an October hold, and analysts said the PCE inflation data released that day emerged as the biggest variable in determining the path of rates.

5. Countdown to MSCI Review: Weak Market Leaves Zero Candidates for Inclusion

Key summary: The final MSCI Korea Index review of the year is set to include no new additions. All seven candidates, including GS, Samsung E&A and LS, met the free-float market capitalization threshold but fell short of the inclusion cutoff of 13.33 trillion won by between 22.6% and 46.1%. LG Uplus (47.0% short on a free-float basis) and Yuhan (9.3% short on total market capitalization) have entered the zone at risk of deletion, and analysts say share-price checks are warranted given that stocks deleted in the August review fell an average of 7.5% by the rebalancing date. The reference date will be one of the last 10 trading days of October, with the revised index to take effect from Dec. 1.

6. Korean Investors in Japan Turn Buyers After Four Months, Piling Into Index ETFs

Key summary: Korean retail investors broke a three-month net selling streak by buying a net $8.12 million (about 11 billion won) of Japanese stocks in September, their first month of net buying in four. Although the Bank of Japan raised its policy rate in September to 1.25%, the highest in 31 years, limited signals of accelerated tightening brought a sense of relief to the market, while the yen's weakness at around 157 per dollar supported expectations for exporters' earnings. The most heavily bought stock in September was the Global X Nikkei 225 ETF ($14.36 million), and combined net buying of four index ETFs surged to 10.7 times the August figure of $1.72 million, suggesting a shift in investment patterns from individual stock picking to index tracking. The key issue going forward is the pace of further tightening, with Japan's 10-year government bond yield at a 30-year high of 3.1%, and analysts say the BOJ is more likely to moderate its pace than deliver consecutive hikes at its October meeting.