Foreign buying spree triggers historic rebound in South Korean stocks, institutions warn of a "dead cat bounce"

Odaily News: After a prolonged slump throughout July, the KOSPI index surged over 17% at one point on the 31st, marking the largest single-day gain in history. While some investors optimistically view this rebound as a "signal flare" for a market trend reversal, market experts argue that the South Korean stock market's vulnerability to foreign capital flows and its highly volatile structure have once again been validated, and this rebound may ultimately turn out to be just a "dead cat bounce."

Data shows that within just over two minutes of market open, net foreign buying of South Korean stocks reached KRW 1.6 trillion; by market close, foreign investors had accumulated a net purchase of KRW 7.18 trillion for the day, setting an all-time record. Meanwhile, South Korean retail investors recorded a net sell-off of KRW 8.2 trillion, also marking a historic single-day net selling record.

Analyst Lee Chae-won stated: "It's difficult to determine at this point whether this rebound is a temporary technical recovery or the starting point of an upward trend." "Ultimately, the key lies in the semiconductor cycle. Given market skepticism over whether high operating profit margins can be sustained, investors should pay attention over the next six months to whether semiconductor supply bottlenecks will persist beyond 2028." A source from the asset management industry noted: "Retail investors who are currently trapped at high levels are likely to sell to lock in profits when the index approaches previous highs around the 8,000 to 9,000 point range, thereby suppressing the upward trend." (Jin Shi)