Foreigners ditch sluggish Korean stocks

Foreign investors dumped more than 6 trillion won ($4.44 billion) worth of shares listed on Kospi, Korea’s main bourse, in the past three months amid the slow stock market, data from the Korea Exchange showed Sunday.
Non-Korean investors’ net buying on Kospi this year dropped to 7.23 trillion won on Friday after reaching the peak at 14.06 trillion won on June 16. The offloaded shares in the past three months -- worth 6.73 trillion won -- mean foreigners have sold nearly half of their purchases made earlier this year.
Overseas investors have been on a selling streak for the 11th consecutive trading day, from Sept. 18 to Friday, the longest period seen in a year since September 2022. If the selling move continues Tuesday, the first trading day after the Hangeul Day holiday, it will be the longest streak in 16 years.
Top sold shares for foreign investors were secondary battery-related stocks as the investment boom led by retail investors eased out, including Posco Holdings (5.38 trillion won), LG Chem (1.45 trillion won), LG Energy Solution (942 billion won), Samsung SDI (720 billion won), SK Innovation (287 billon won) and Posco Future M (281 billion won).
The massive sell-offs come on the back of US Treasury yields hitting a decades-high. The mounting expectations on the US Federal Reserve continuing its aggressive monetary tightening policy have lead to an outflow of foreign funds.
With foreign investors leaving the market and a weaker investment sentiment, the local stock market has been sluggish. Kospi, which had stayed in the 2,500-2,600 box in the second half of this year, closed at 2,408.73 points on Friday, unable to recover to the 2,500-point range since Sept. 25.
This contrasts to foreign investors' massive buying spree in the first half of this year, net buying shares worth 12.31 trillion won in the first six months of 2023.
Though the selling splurge threatens the local stock market, market watchers expect overseas investors to return to Korean stocks in the near future as recent economic indicators are likely to signal a recovery.
The US' Consumer Price Index for September on Thursday is expected to show the first decline in the year-over-year rate in three months, which could indicate a retreat of inflation.
“Foreign investors are the second largest entity on the local stock market, following retail investors. They are a key player that leads the Kospi market," analyst Kang Jin-hyeok from Eugene Investment & Securities assessed.
“Considering the recent slowdown in the US economy and stabilization efforts from the Bank of Korea, an inflow of foreign investment is likely to happen in the fourth quarter or next year when Korea’s exports recover,” Kang explained.
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