Foreign investors in the Korean stock market sold nearly 10 trillion won in net during April, positioning themselves for a ninth consecutive month of 'Sell Korea.' The foreign equity ratio in the securities market has fallen to the low 30% range. However, the intensity of net selling is slowing. Observers note that the timing for foreign investors' return to the domestic market is approaching.
According to the Korea Exchange, foreign investors sold a net 9.7938 trillion won in the securities market from the 1st to the 25th of this month. Although there are still three trading days left, the scale of net selling is so large that a nine-month consecutive 'sell' by foreigners is considered an established fact.
In this case, it would be the second-highest record ever. The longest period of net selling by foreigners in the securities market occurred from June 2007 to April 2008 during the global financial crisis, lasting 11 months. Additionally, the largest monthly net selling amount by foreigners on the KOSPI was 12.555 trillion won in March 2020, right after the onset of the pandemic.
Due to the long-term outflow of foreign funds, the foreign equity ratio of the KOSPI (based on market capitalization), which was 35.65% at the end of July last year, has fallen to 31.52% as of the 24th of this month. This is the lowest level since August 30, 2023.
During this period, the cumulative net selling amount by foreigners is 38.9354 trillion won. Of this, 24.4349 trillion won was concentrated in Samsung Electronics alone. Compared to Hyundai Motor, which is in second place for net selling (2.088 trillion won), that amount is about 12 times larger. The foreign equity ratio for Samsung Electronics, which was close to 60%, has now decreased to around 50%.
However, the intensity of foreigners' net selling has been slowing recently. Earlier this month and in mid-April, the daily net selling by foreigners ranged from 1 trillion to 2 trillion won, but as the month progresses toward the end, it has decreased to the range of 100 billion to 200 billion won. Some in the market are saying, 'foreigners will return soon.'
The fact that foreign funds are flowing into won-denominated bonds is also a factor boosting market expectations. There is a growing belief that it is merely a preference for safe assets rather than a departure from the Korean market itself.