The Third Longest Selling Streak in History... When Will Foreigners Return?

As the KOSPI index surpassed the 1,800 mark immediately after the market opened on the 7th, dealers at the KEB Hana Bank Foreign Exchange Bank dealing room in Jung-gu, Seoul, are moving busily. The KOSPI index recovered the 1,800 level intraday for the first time in about a month. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Koh Hyung-kwang] As the real economy is being seriously impacted by the spread of the novel coronavirus infection (COVID-19), foreign investors' selling pressure in the domestic stock market shows no signs of easing. The general analysis is that for the foreign selling spree to stop, the spread of COVID-19 must subside and the anxiety must disappear.

According to the Korea Exchange on the 8th, foreign investors showed a net selling dominance for 24 consecutive trading days in the KOSPI market from the 5th of last month until the day before. This 24-day consecutive net selling period ranks as the third longest in history, tying with the period from September 22 to October 26, 2005. At that time, foreign investors sold a total of 3.3 trillion won worth of stocks.

The longest consecutive selling period by foreign investors was during the global financial crisis, from June 9 to July 23, 2008, lasting 33 trading days. During that period, they sold stocks worth 8.98 trillion won. The next longest was from August 5 to September 15, 2015, lasting 29 trading days, during which foreign investors sold stocks worth 5.54 trillion won.

In terms of selling volume alone, this current period is the largest ever. Daily sales ranged from a minimum of 200 billion to 300 billion won to as much as over 1 trillion won, and the total stocks sold in just over a month reached a staggering 13.5 trillion won. Among the top three stocks with the highest net foreign selling over the recent 24 trading days were Samsung Electronics, Hyundai Motor, and SK Hynix, with net sales of 4.7381 trillion won, 827.3 billion won, and 771.5 billion won respectively. The total selling amount of these three stocks was 6.3369 trillion won, accounting for 46.9% of the total net selling amount.

The market is focused on when the foreign selling will end. Although there are some differences in views regarding the exact timing in the securities industry, most expect a shift to buying within the first half of the year. Kiwoom Securities researcher Seo Sang-young said, "As the spread of COVID-19 is showing some signs of calming down and liquidity is being supplied through coordinated monetary policies by major central banks, anxiety is gradually decreasing, so the return of foreign investors does not seem far off." IBK Investment & Securities researcher Kim Ye-eun predicted, "Considering the recent decrease in selling volume and the drop in the won-dollar exchange rate, foreign investors are expected to return to the domestic stock market within the first half of the year."

There is also an opinion that, considering the domestic stock market has followed the direction of the U.S. stock market so far, foreign investors will only turn to buying once it is confirmed that the U.S. stock market is stabilizing. Shinhan Financial Investment researcher Kwak Hyun-soo diagnosed, "For foreign investors to switch to net buying, the U.S. stock market must stabilize. The bottom of the New York stock market is expected around the end of May, and during this period, the domestic stock market must endure the foreign investors' outflow."

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