"King Dollar to Last Long"... Foreigners Resume 'Sell Korea' This Month

Foreigners Net Sell 1.5 Trillion KRW in Domestic Stocks from the Start of This Month to the 8th
Shift from Consecutive Net Buying in July and August to Selling Again

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Foreign investors have net sold more than 1.5 trillion won worth of domestic stocks since the beginning of this month. After purchasing nearly 4 trillion won worth of stocks last month following 1.8 trillion won in July, they have turned to net selling within two months.

According to the Korea Exchange on the 11th, foreign investors net sold approximately 1.5806 trillion won in the domestic stock market through the 8th of this month. They sold about 1.4731 trillion won in the KOSPI market and 87.7 billion won in the KOSDAQ market.

Foreigners sold domestic stocks as U.S. monetary tightening intensified this year. They net sold about 19.7737 trillion won worth of stocks through June. However, they expanded purchases by net buying 1.8108 trillion won in July and 3.9825 trillion won in August, before switching back to net selling this month.

The stock most sold by foreigners this month was Samsung Electronics, with sales amounting to 1.0342 trillion won. This was followed by Doosan Enerbility (-208.1 billion won), Kakao (-75.1 billion won), POSCO Holdings (-71.3 billion won), and Samsung Biologics (-57.8 billion won) in net sales.

On the other hand, LG Energy Solution was the most net purchased stock during this period, with 122.7 billion won worth bought. Korea Aerospace Industries (113.1 billion won), Hyundai Motor (98 billion won), Kia (66.7 billion won), and Hanwha Solutions (61.8 billion won) followed.

The selling pressure from foreigners is attributed to the strong dollar. The dollar's value has steadily risen this year amid the spread of global geopolitical crises such as the Ukraine war, and since July, the won-dollar exchange rate has remained above 1,300 won, with the dollar's strength continuing. This month, it surged for five consecutive trading days, breaking through 1,380 won. In the early phase of the dollar's ultra-strength, foreigners bought domestic stocks at low prices, but due to concerns over a global economic recession and the expectation that the dollar's strength will continue for some time, they appear to be selling domestic stocks.

Kim Jun-hyung, a researcher at Heungkuk Securities, said, "It has been confirmed that the currency maintaining its value best amid the chaotic situation caused by expanded geopolitical conflicts after COVID-19 and inflation due to supply chain disruptions is the dollar." He added, "Considering China's zero-COVID policy, the U.S.'s robust employment and consumption, Europe's sluggish economy and tightening to control inflation, the yen's weakness caused by interest rate differentials between Japan and the U.S., and Korea's continued trade deficit deterioration, the won-dollar exchange rate's trend toward a strong won is likely to be delayed until the first half of next year."

He continued, "Considering uncertainties such as Russia accelerating the weaponization of energy resources ahead of winter and OPEC's production cuts, there seems to be little positive change in the current outlook," adding, "It is necessary to keep the upper limit of the won-dollar exchange rate open up to 1,450 won until the end of the year."

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