This week (Nov. 3–7), foreigners' net selling in the main stock market hit an all-time high. As concerns grew over an artificial intelligence (AI) bubble that started in the United States, foreign funds with weakened investor sentiment flowed out in large amounts. As a result, the KOSPI index fell sharply.
According to the Korea Exchange (KRX) on the 9th, foreigners' net selling in the KOSPI market in the first week of November (3–7) totaled 7.264 trillion won. This is the largest weekly net selling by foreigners ever recorded in the main stock market.
The period with the largest weekly net selling by foreigners until then was on Aug. 9–13, 2021, with foreigners' net selling at 7.0454 trillion won. At that time, as DRAM prices fell, concerns about a downturn in the semiconductor industry grew, leading to a massive outflow of foreign funds.
What depressed foreigners' investor sentiment this week was the ongoing debate in the U.S. stock market over AI being overvalued. The U.S. market acknowledges growth in the AI industry, but concerns persist that the stock prices of tech shares lifted by growth expectations are too high and that valuations are overly optimistic.
In Korea's stock market, the semiconductor sector, including Samsung Electronics and SK hynix, had been strong on the back of the AI boom, but as the overvaluation debate persisted, the semiconductor sector took a direct hit.
Foreigners' net selling concentrated on large-cap semiconductor stocks Samsung Electronics and SK hynix. The stock most heavily net sold by foreigners this week was SK hynix, at 3.715 trillion won. Samsung Electronics followed with 1.503 trillion won in net selling.
In the main stock market, foreigners posted net selling for five consecutive trading days from the 3rd through the 7th. The net selling of 795 billion won on the 3rd surged to the 2 trillion won range on the 4th and 5th, and on the 6th and 7th foreigners showed selling dominance of 1.7 trillion won and 455 billion won, respectively.
As "big-hand" foreigners turned heavy sellers, the KOSPI index fell 3.7% this month. In particular, on the 5th it plunged more than 2.8%, triggering a sell-sidecar that temporarily suspended the effectiveness of program sell quotes.
The continued rise in the won–dollar exchange rate is also a factor depressing foreigners' investor sentiment. Recently, the rate has neared the 1,450 won level, extending the won's weakness.