Foreigners Leaving Korean Stock Market with 1.2 Trillion Won Sold Last Week Alone...

Net Selling of 89 Billion Won on KOSPI Today
Expert: "Liquidity-Driven Market Still Valid, Will Return Once Situation Calms"

[Asia Economy Reporter Song Hwajeong] As investment sentiment shrinks due to the novel coronavirus infection (Wuhan pneumonia) situation, foreign investors continue to sell off. They sold more than 1 trillion won just last week. Experts predict that since the liquidity-driven market that led the stock market rally at the beginning of the year is still valid, foreigners will return once the situation calms down.

According to the Korea Exchange on the 3rd, foreigners net sold about 1.2765 trillion won in the domestic stock market last week. They sold 1.1341 trillion won in the KOSPI market and 142.3 billion won in the KOSDAQ market, respectively. As of 11 a.m. on the same day, foreigners continued their selling dominance on large-cap stocks by net selling 88.9 billion won in the KOSPI market.

Foreigners, who led the domestic stock market's rise with strong buying at the beginning of the year, turned to safe assets after the novel coronavirus situation and continued selling for two consecutive weeks in the domestic stock market. The scale of foreigners' selling, which was 467.3 billion won the previous week, expanded significantly in just one week, raising concerns that a large amount of funds will flow out if the selling trend continues.

Seosangyoung, a researcher at Kiwoom Securities, analyzed, "Last week, the Korean stock market continued to decline due to concerns about economic slowdown caused by the spread of the novel coronavirus." He added, "Sell orders were mainly seen in retail/distribution, transportation/equipment, and chemical sectors with high sales proportions in China, and both foreigners and institutions engaged in large-scale selling, which was the cause of the index's decline." Researcher Seo said, "Foreigners mainly sold in the electrical and electronics sector (823.8 billion won net selling) and offered sell orders across most sectors."

Although the foreign selling offensive is intensifying, the securities industry does not expect this downward trend to continue for a long time. Seo Jeonghoon, a researcher at Samsung Securities, said, "At this point, the impact of the epidemic is being controlled at the lowest level in history, and even during previous virus outbreaks in recent years, financial market volatility was short-lived." He added, "Considering the improvement in the global trade environment and liquidity conditions, which have been the driving forces behind the recent rise, the index decline will be limited around the current level."

Kim Yeeun, a researcher at IBK Investment & Securities, analyzed, "It is more appropriate to view the foreign selling trend as partial profit-taking rather than a complete shift to selling." She added, "Major countries' central banks continue accommodative monetary policies, and the Chinese government is expected to implement economic stimulus measures, including interest rate cuts and monetary easing to defend against economic slowdown caused by the novel coronavirus, so the liquidity-driven market will continue."

This content was produced with the assistance of AI translation services.