Domestic Stock Market Plunge...Foreign Capital Withdraws 20 Trillion Won Over 8 Trading Days

[Asia Economy Reporter Park Jihwan] More than 2 trillion won of foreign capital has withdrawn from the domestic stock market since the end of last month.

According to the Korea Exchange on the 11th, from the 28th of last month, when the KOSPI began to plunge more than 1%, until the 8th of this month, over 8 trading days, foreigners net sold 2.0844 trillion won worth of stocks in the domestic market (1.9758 trillion won in the KOSPI market and 18.7 billion won in the KOSDAQ market).

During this period, the KOSPI and KOSDAQ fell by 5.66% and 7.90%, respectively. Looking at the entire month of September, foreigners net bought 1.0103 trillion won worth of stocks in the domestic market.

However, foreigners have recently been rapidly withdrawing their investments from the domestic stock market. Over the past 8 trading days, they net sold 981.6 billion won worth of Samsung Electronics shares. Adding the 740.9 billion won selling pressure from institutions, Samsung Electronics’ stock price plunged 7.98%.

Foreigners also heavily sold Samsung Electronics Preferred shares (303.3 billion won, -7.92%), Kakao (120.6 billion won, -2.08%), Samsung SDI (105 billion won, -6.67%), and SK Hynix (84.1 billion won, -10.05%).

This selling trend by foreigners is interpreted as a risk-averse reaction caused by overlapping external negative factors such as global supply chain instability, inflation concerns, uncertainty over the US debt ceiling negotiations, and the China Evergrande Group crisis. Since the domestic stock market belongs to the emerging markets, it is affected by foreigners withdrawing investments from emerging market stocks, which are relatively riskier assets.

Since last year, the 'Donghak Ants,' who have supported the market downside by absorbing foreign sell-offs, have recently shown significantly weakened strength in the declining market. On the 7th, when the KOSPI stopped falling by more than 1% for three consecutive days and rebounded, individual investors net sold 938.4 billion won worth of stocks. The average daily net buying amount by individual investors this month is 191.4 billion won, which is only about 15% compared to 1.2935 trillion won in January.

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