Korean stocks saw foreign investors offload 3.5 trillion KRW today, with Samsung and SK Hynix facing global interest rate headwinds
Odaily News, data from the Korea Exchange shows that foreign investors aggressively sold off Korean stocks on the 19th, recording a net sell-off of 3.485 trillion KRW in a single day. Institutional investors also net sold 1.324 trillion KRW, while retail investors absorbed the selling pressure with net purchases of 4.633 trillion KRW.
Prior to this, foreign investors had recorded net purchases in Korean stocks for five consecutive trading days (from the 11th to the 18th), with cumulative purchases reaching 8.129 trillion KRW. However, the single-day selling volume on the 19th already accounted for 42.9% of the previous cumulative purchases, prompting market attention on whether the foreign capital inflow trend can persist.
Recent foreign buying has been concentrated in the semiconductor sector. Data shows that between the 12th and 18th, approximately 87% of foreign net purchases flowed into semiconductor stocks, particularly Samsung Electronics and SK Hynix. On the 18th, while overall foreign net buying in Korean stocks was only 91 billion KRW, the semiconductor sector attracted inflows exceeding 1 trillion KRW. This suggests foreign investors are primarily betting on the AI chip cycle rather than a broad recovery in risk appetite toward Korean stocks.
The recent shift in foreign investor behavior is mainly attributed to the rapid rise in long-term government bond yields in the U.S. and Japan. The U.S. 30-year Treasury yield rose to 5.337% intraday on the 18th, marking its highest level since 2007. Meanwhile, Japan's long-term government bond yields have also continued to climb, intensifying volatility in global bond markets.
Market analysts indicate that the rise in U.S. long-end rates is not primarily driven by expectations of renewed Fed rate hikes, but rather by factors such as an expanding U.S. fiscal deficit, increased Treasury issuance pressure, and rising corporate bond issuance from major tech companies driven by AI data center investments. Given that long-term bond yields have risen significantly more than short-end rates, the market tends to interpret this as an increase in the term premium.
If long-term interest rates in the U.S. and Japan remain elevated, foreign capital flows into Korean stocks may face further pressure. Given the heavy weighting of exports and semiconductors in the Korean stock market, it is highly sensitive to U.S. market interest rates, dollar movements, and shifts in global liquidity. Foreign investors may continue to take profits in recently high-performing stocks such as Samsung Electronics and SK Hynix.
However, some argue that this round of interest rate shocks may not necessarily evolve into sustained capital outflows. The Treasury issuance pressure that has recently driven up U.S. long-term bond yields may ease periodically. Additionally, if U.S. inflation and geopolitical risks cool down, the term premium could retreat, potentially prompting foreign investors to re-enter the semiconductor sector, which offers higher earnings certainty.
For now, the Korean market's capacity to absorb foreign selling has weakened. As of the 18th, deposits in Korean investor accounts stood at 104.7551 trillion KRW, down significantly from approximately 130 trillion KRW at the end of June. Credit transaction financing balances also remain below the highs seen in June. Therefore, future movements in U.S. and Japanese interest rates will remain a key variable influencing capital flows in the Korean stock market. (Daum)
