May witnessed a notable divergence in South Korea’s equity markets, with foreign investors recording unprecedented selling volumes on the benchmark Korea Composite Stock Price Index (KOSPI) even as they injected record capital into the tech-focused KOSDAQ market, according to Sunday’s data.
Specifically, offshore investors divested a staggering net 44.71 trillion won (approximately $29.66 billion) from local KOSPI-listed stocks during May. This figure not only represents a significant outflow but also considerably exceeded the previous peak net selling record of 35.74 trillion won established just two months prior in March, as confirmed by Korea Exchange data.
This substantial foreign sell-off on the KOSPI index was sustained over 16 consecutive trading sessions, spanning from May 7 to May 29. Such a prolonged divestment marks the longest selling streak observed since February 2009, a period following the 2008 global financial crisis which saw 17 consecutive days of foreign stock sales.
In stark contrast to the institutional exodus, domestic retail investors demonstrated robust confidence, collectively purchasing a record net 36.09 trillion won worth of stocks, thereby setting an unprecedented monthly high for net buying.
Industry analysts largely attribute this significant foreign divestment from KOSPI to strategic profit-taking. This follows an extended tech rally, primarily fueled by strong performances from leading South Korean chipmakers like Samsung Electronics Co. and SK hynix Inc.
Concurrently, the secondary KOSDAQ market presented a contrasting narrative. Foreign investors actively acquired a net 2.8 trillion won worth of shares this month, surpassing its own previous record of 2.7 trillion won in net buying established in July 2023.
Market observers suggest that this robust capital inflow into KOSDAQ stocks was substantially propelled by anticipation for a newly introduced investment fund. This fund, designed to offer attractive tax benefits and crucial loss protection, became accessible to investors via local banks and securities firms starting earlier in the month, significantly boosting its appeal.
