Foreign investors net sold nearly $110 billion worth of Korean stocks this year, increasing pressure on retail investors to absorb the supply

Odaily Planet Daily News: Since the beginning of this year, foreign investors have withdrawn nearly $110 billion from the Korean stock market, setting a new record high. The main reason is to prevent their portfolio allocation from becoming unbalanced due to the rapid rise of Korean stocks. This has forced domestic retail investors in South Korea to shoulder most of the buying. Following purchases of 42.4 trillion won in June, Korean retail investors have net bought 13.2 trillion won worth of KOSPI stocks this month so far.

As of July 14, the outstanding margin balance for retail investors investing in KOSPI stocks stood at 28 trillion won, after hitting an all-time high of 29.8 trillion won on June 24.

Alexander Redman, Chief Equity Strategist at CLSA in France: “Korea remains the most overweight market in our portfolio, but I have started to reduce positions. What concerns me is that the market is currently dominated by retail investors, as they are heavily using margin trading.” (Jin Shi)