South Korea’s Kospi Plunges Below 7,500 Amid Massive Foreign Sell-Off Exceeding ₩5 Trillion
South Korea’s benchmark stock index, the Kospi, experienced a dramatic reversal on Friday, with its historic climb above 8,000 proving short-lived. The index, after hitting an intraday record, tumbled significantly by the close, fueled by widespread profit-taking.
The Kospi ultimately closed at 7,493.18, marking a substantial 6.12 percent decline from the previous session and its lowest finish for the week. This sharp downturn occurred just as the market had gained an impressive 1,000 points in merely seven trading days.
The reversal was notably sharp. After peaking as high as 8,046.78 within the first thirty minutes of trading, the index quickly retreated below its 7,951 opening level. The slide continued throughout the day, eventually touching a trough of 7,371.68. From its intraday peak to its lowest point, the Kospi lost a staggering 675.10 points, representing an approximate 8.4 percent drop.
This Friday sell-off nearly erased the entire rally that had been building since the Kospi first breached the 7,000 mark intraday on May 7, highlighting the fragility of recent market gains.
The heightened volatility was primarily driven by a significant divergence in investor flows. Foreign investors engaged in substantial profit-taking, while retail investors aggressively sought to “buy the dip,” attempting to capitalize on the falling prices.
Foreign investors divested a net ₩5.56 trillion (approximately $3.7 billion) on the Kospi, extending their selling streak to seven consecutive sessions. While retail investors net bought ₩7.2 trillion, actively absorbing the sell-off pressure, institutional investors also offloaded ₩1.74 trillion, collectively intensifying the downward pressure on the index.
The sustained foreign selling also had a notable impact on the Korean won, pushing the dollar-won exchange rate above 1,500 for the first time in approximately a month. The exchange rate climbed as high as 1,506.8 after opening at 1,494.2, eventually settling at 1,509.6 by the market close, indicating further currency depreciation.
jwc
