Will Foreign Investors Change Course Again in September After Four Months of Net Selling?

Foreign Investors Record Net Selling of 1.6 Trillion Won in August After Four Months
KOSPI Turns Downward for First Time in Five Months as Foreigners Shift to Selling
Disappointment Over Tax Reform, Tariff Concerns, and Monetary Policy Uncertain

Foreign investors have returned to net selling after four months. Last month, they sold more than 1 trillion won in the Korea Exchange's main board. Due to this shift to net selling by foreign investors, the KOSPI ended August without recovering the 3,200-point level. While there are hopes for foreign investors to return to net buying in September and for the KOSPI to break out of its current trading range, many analysts believe the outlook remains challenging.

According to the Korea Exchange on September 1, foreign investors sold 1.6146 trillion won in the main board last month, marking a return to net selling after four months.

Foreign investors had switched to net buying in May for the first time in ten months and maintained their buying streak for three consecutive months. In the main board, they recorded net purchases of 1.1656 trillion won in May, 4.8203 trillion won in June, and 6.2805 trillion won in July.

However, disappointment over the tax law revision announced at the end of July provided foreign investors with an excuse to realize profits. Concerns over tariffs and uncertainties regarding U.S. monetary policy also dampened investor sentiment.

The switch to net selling by foreign investors weighed on the KOSPI's performance. After an upward trend since April, the KOSPI reversed course and declined for the first time in five months, falling 1.83% in August. Han Ji-young, a researcher at Kiwoom Securities, explained, "The domestic stock market declined in August as disappointment sales emerged following the announcement of tax reform measures, such as the strengthening of major shareholder transfer tax standards and an increase in the top tax rate for dividend income compared to previous plans. Although expectations for a rate cut grew after Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole meeting, narrowing the decline, the market remained range-bound throughout the month."

Foreign investors focused on profit-taking last month. After being the largest buyers of Samsung Electronics in July, foreign investors became the largest sellers in August, recording net sales of 1.164 trillion won. They also ranked high in net selling for NAVER (704.3 billion won), Alteogen (313.3 billion won), and Hanwha Ocean (309.6 billion won). Defense and nuclear power stocks, which had previously risen significantly, were also subject to profit-taking. Hanwha Aerospace saw net sales of 167.2 billion won, Hyundai Rotem 119 billion won, and Doosan Enerbility 145.8 billion won.

Uncertainty is expected to persist in September, making it difficult to respond to the market. One researcher noted, "Recently, the domestic stock market has been sluggish. When the KOSPI broke through the 3,200-point level in early July, there was confidence that a historic high could be reached quickly. However, for nearly two months now, the index has been fluctuating around the 3,200-point mark. Disappointment over the domestic tax reform plan remains, and as of the end of August, no visible results have emerged. In addition, leading sectors such as shipbuilding, defense, and nuclear power are frequently exposed to correction pressures, making market response more challenging." The researcher added, "The KOSPI is expected to remain in a phase of searching for direction in September. Macro concerns, such as uncertainty over the September Federal Open Market Committee (FOMC) meeting and unconfirmed tariff shocks, are likely to limit the index's upward movement."

Yoo Myung-gan, a researcher at Mirae Asset Securities, also commented, "The stock market environment in September is expected to be neutral, similar to August. While expectations for a rate cut have increased, uncertainty over inflation remains. The burden of second-half earnings for domestic companies will likely slow the index's upward momentum."

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