Foreign investors sold a net 20 trillion won worth of KOSPI shares over the past month or so, with the selling concentrated in Samsung Electronics (005930.KS) and SK hynix (000660.KS). The two chipmakers alone accounted for more than 17 trillion won in net sales, pulling down foreign ownership in both. Analysts, however, say the pace of selling matters more than the cumulative total, noting that it has been easing. They expect foreign buying could return if third-quarter earnings confirm a solid chip market and profit growth.
Foreign investors sold a net 20.305 trillion won on the KOSPI between the 1st of last month and the 2nd of this month, according to the Korea Exchange on the 5th. The figure includes after-market trading, which launched on the 15th of last month. Foreigners were net buyers on only seven of the 22 trading sessions in that period. On the 28th of last month alone, net selling topped 3 trillion won. Foreign holdings now account for 39.66% of total KOSPI market capitalization, down from earlier levels.
The selling was concentrated in large-cap chip stocks. Net selling in SK hynix was the largest at 12.009 trillion won, followed by Samsung Electronics at 5.186 trillion won. Combined net sales of 17.195 trillion won in the two stocks amounted to about 85% of total foreign net selling on the KOSPI.
Foreign ownership ratios fell in tandem. SK hynix stood at 49.76% as of the 2nd of this month, the lowest in about three years and four months since May 15, 2023, when it was 49.46%. Samsung Electronics slid to 46.40% on the 30th of last month before edging up to 46.41% on the 2nd.
The selling reflects continued profit-taking after a steep rally in large-cap chip stocks in the first half. Uncertainty over the protracted war between the United States and Iran, along with rising interest rates in the U.S., Europe and other major economies, also appears to have weighed on sentiment.
The intensity of the selling has eased somewhat this month. Foreign investors bought a net 243 billion won on the KOSPI on the 1st, and while they returned to net selling on the 2nd, the amount was limited to 190 billion won. That is why analysts say investors should watch the easing selling pressure rather than judge the market's direction solely on whether foreign selling continues.
Han Ji-young, an analyst at Kiwoom Securities, said foreign net selling on the KOSPI is at its highest level since the start of the year, but monthly net purchase figures show the intensity of that selling has weakened over time. "At this point, reading the streak of foreign net selling as a signal of a trend break and cutting equity exposure on rebounds should be a lower priority," the analyst said. "Investors need to maintain their exposure to Korean equities, centered on key sectors such as semiconductors, on the view that foreign investors are likely to return as net buyers once macro risks pass their peak."
Chipmakers' earnings are seen as the variable that will determine fund flows from here. Micron Technology, the first of the three global memory makers to report, posted better-than-expected results on the 30th of last month. Samsung Electronics is scheduled to release preliminary third-quarter earnings around the 8th of this month. If chipmakers can demonstrate a firm market through their results and improve visibility on future profits, that could support a return of foreign money to the Korean market, analysts said.
