Foreigners Turning Away... Bought Leverage ETFs and Sold Inverse ETFs

Net Purchase of 1 Trillion KRW in KOSPI the Previous Day, Accumulating Top Market Cap Stocks Including Samsung Electronics
US Domestic Interest Rate Stability and Weak Dollar... Supporting Conditions for Foreign Investors' Return

[Asia Economy Reporter Song Hwajeong] As foreigners have stepped up their buying after a long time, leading the KOSPI to reclaim the 3000-point level, expectations for the return of foreign investors are growing. In particular, foreigners showed a tendency to bet on the rise of the domestic stock market by net buying leveraged exchange-traded funds (ETFs) while selling inverse ETFs.

As of 9:10 a.m. on the 12th, foreigners recorded net purchases of 77.5 billion KRW in the KOSPI market and 4.1 billion KRW in the KOSDAQ. This marks the third consecutive day of buying in the KOSPI. Notably, foreigners bought 1.708 trillion KRW in the KOSPI and 211.7 billion KRW in the KOSDAQ the previous day, driving the recovery of the KOSPI to 3000 points and the KOSDAQ to 900 points. It is the first time in over two months since January 8 that foreigners have purchased more than 1 trillion KRW in the KOSPI.

Foreign investors appear to be placing weight on the domestic stock market rising in the future. On the previous day, foreigners bought 62.3 billion KRW worth of the KODEX Leverage ETF, ranking it among the top net purchases. Conversely, they sold 59.4 billion KRW of the KODEX 200 Futures Inverse 2 ETF, making it the most sold, and also sold 18.1 billion KRW of the KODEX Inverse ETF. Inverse ETFs are designed to generate profits when the underlying assets decline, whereas leveraged ETFs are designed to yield double the returns when the underlying assets rise. The fact that foreigners bought leveraged ETFs while net selling inverse ETFs suggests they anticipate an index increase going forward.

Additionally, attention is drawn to the fact that foreigners have switched to net buying Samsung Electronics, which they had been continuously selling this year. Since the beginning of the year, foreigners have net sold Samsung Electronics by 6.1995 trillion KRW, the largest net sale among stocks. Even this week, foreigners had consistently ranked Samsung Electronics as the top net sold stock, but on the previous day, they bought the most Samsung Electronics shares, showing a change. The foreign ownership ratio of Samsung Electronics fell to 54.57% on the 10th, marking the lowest level this year, but rose again to 54.67% the previous day. Besides Samsung Electronics, foreigners also evenly acquired top market capitalization stocks such as SK Hynix, LG Chem, Samsung SDI, Kakao, Celltrion, and Kia Motors.

The surrounding conditions supporting the return of foreigners are also positive. The U.S. Treasury yields, which had been a bearish factor for the domestic stock market, have stabilized, and the dollar has turned weaker. In the Seoul foreign exchange market on this day, the won-dollar exchange rate started at 1,131.0 won, down 4.9 won. The previous day closed at 1,135.9 won, down 6.8 won, showing a decline for the first time in six trading days. Overnight, the U.S. 10-year Treasury yield showed a stable trend around the 1.5% level. An Soeun, a researcher at IBK Investment & Securities, analyzed, "The February U.S. consumer price index showed a moderate rise in line with market expectations, and the U.S. Treasury 3-year and 10-year auctions proceeded smoothly, calming the rise in yields. As a result, the domestic stock market saw bargain hunting by institutions and foreigners, especially in sectors that had been excessively sold, recovering most of the weekly losses."

If the upcoming U.S. Federal Open Market Committee (FOMC) meeting next week can ease concerns about rate hikes and inflation, foreign buying is expected to continue steadily. Lee Jaeseon, a researcher at Hana Financial Investment, said, "Since the burden on the domestic index level has significantly decreased, if the Fed expresses a more dovish stance than the market expects, it is necessary to keep open the possibility of bargain hunting inflows."

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