Korea Investment & Securities Co. analyzed on the 10th that foreigners' net selling of 54 trillion won in Korea's stock market this year was not due to diminished appeal of Korean equities but was the result of global asset allocation adjustments.

In the afternoon on the 9th, a dealing room display board at the Hana Bank headquarters in Jung-gu, Seoul shows the KOSPI and KOSDAQ indexes and the won-dollar exchange rate. The KOSPI closes at 5,778.01, down 94.33 points from the previous day's close, and the KOSDAQ closes at 1,076.00, down 13.85p. The dollar-won exchange rate stands in the 1,480-won range. 2026.4.9 /Courtesy of News1 Lee Jongsu, intern reporter

Yeom Dong-chan, an analyst at Korea Investment & Securities Co., said in a report that while roughly $6.0 billion is flowing into Korea exchange-traded funds (ETF) listed in New York, foreigners are net selling about 54 trillion won in Korea's stock market, adding it is "hard to understand the gap."

Some suggest that concerns about a weak won are driving foreign funds out. However, Yeom said, "In general, exchange-rate volatility is smaller than stock volatility and larger than bond volatility," adding, "Even so, given that foreigners continue to be net buyers of domestic bonds, it is hard to explain the situation by currency factors alone."

Instead, he raised the possibility that the strategic asset allocation limits of global pension funds and sovereign wealth funds had an impact. Yeom explained, "On the back of a strong Korean market, the Korea weighting within the portfolios of global pension funds and sovereign wealth funds may have approached their strategic asset allocation limits."

In fact, among the countries that have been major net sellers of Korean stocks this year are Canada, the Netherlands, Singapore and Saudi Arabia, which are known to have high shares of pension funds and sovereign wealth funds.

By contrast, Ireland, where about 73% of ETFs transacted in Europe are domiciled, ranked No. 1 in net purchases of Korean stocks. This suggests that European investors' inflows into Korea ETFs are continuing.

Yeom explained, "The recent gap is likely because funds are flowing into Korea-focused equity funds while selling based on the portfolio management principles of pension funds and sovereign wealth funds is occurring at the same time."

He also advised that clues to the future direction of foreign flows could be found in the futures market. Yeom said, "Position changes by overseas pension funds and sovereign wealth funds are often preceded by futures buying and selling," adding, "Looking at futures flows can offer hints about the future movement of foreign funds."

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