Starting last month, foreign investors, who had been net sellers of Korea's stock market, scooped up more than 2 trillion won in shares on the 12th, led by large-cap semiconductor stocks. As foreigners, who kept selling Korean shares while the market surged past 8,000 points for the first time ever, turned to large-scale net buying for the first time in about a month, expectations are rising that the market could climb further.
On the 11th, when the KOSPI rose more than 4%, foreign investors were net buyers on the Korea Exchange (KRX) for the first time in 25 trading days. According to the Korea Exchange (KRX), foreigners posted net purchases of 2.6 trillion won that day (Korea Exchange and NEXTRADE (NXT) combined), shifting to a buying bias for the first time in 25 trading days.
From the 7th of last month through the previous day, foreigners sold a total net amount of 75.57 trillion won over 24 consecutive trading days on the KOSPI market. With foreigners returning to large-scale net buying after a long time, the index rose sharply.
In particular, foreigners' net selling focused on the electrical and electronics sector, which includes large-cap semiconductors such as Samsung Electronics and SK hynix.
Recently, as household funds have poured into the domestic stock market centered on exchange-traded funds (ETFs), some say the role of foreign investors has somewhat diminished. However, if large-scale foreign net buying continues, it could serve as additional momentum for the market to rise. In particular, with the won's weakness prolonged, inflows of foreign capital are seen as a key variable.
Lee Jin-woo, head of research at Meritz Securities, said, "In a situation where the won-dollar exchange rate is surging as it is these days, foreign investor flows can act as an important variable for the domestic stock market," noting, "When foreign buying pours into the domestic stock market, it tends to stabilize the won-dollar exchange rate."
Still, experts advise that along with foreign capital inflows, listed companies' earnings and external variables will determine the market's direction over the longer term.
Lee said, "The domestic stock market is in a phase of heightened volatility due to variables such as whether the U.S. market stabilizes and calms down, whether tensions between the United States and Iran are defused, and global capital flows following SpaceX's listing in the United States," adding, "It is too soon to gauge the direction of the domestic market based solely on foreign buying inflows."
Lee Kyung-min, head of FICC research at Daishin Securities, said, "When foreign capital flows into the domestic stock market, it has the effect of making the market's momentum stronger," but assessed, "Rather than foreign buying determining the market's direction, it should be seen as only increasing the intensity somewhat."