The Driving Forces Behind KOSPI 7000: Individuals Pushed, Foreign Investors Pulled

Nearly 17 Trillion Won in Net Purchases by Individuals This Year

Indirect Investment via ETFs Surges Rapidly

Return of Foreign Investors Since April Drives Further Gains

The era of KOSPI 7000 has begun. While strong earnings by companies, including those in the semiconductor sector, have opened the door to the "Chilcheonpi" era, this milestone was only possible thanks to solid market supply and demand. Since the beginning of the year, individual investors have consistently absorbed foreign selling pressure with steady buying, thereby supporting the market. As foreigners returned, the upward momentum of the KOSPI accelerated. The continued robust supply and demand conditions this year, without any slack, became the foundation for the KOSPI to break through the 7,000-point mark.

On the 6th, after the KOSPI surpassed 7,000, employees are celebrating the ceremony in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Yonhap News Agency

According to the Korea Exchange on May 6, individual investors made net purchases of 16.8853 trillion won in the KOSPI market since the beginning of the year. In particular, individuals absorbed the heavy foreign selling in February and March, defending the index from falling. In February, individuals made net purchases of 4 trillion won, and in March, they bought 33.5689 trillion won worth of stocks.

Notably, the inflow of funds into the stock market through Exchange-Traded Funds (ETFs) by individuals has stood out. The total ETF Assets Under Management (AUM) surpassed 300 trillion won at the beginning of the year and then grew by 100 trillion won in just three months, exceeding 400 trillion won last month. Financial investment (securities), which is estimated to be ETF capital, made net purchases of 38.9664 trillion won in the KOSPI market since the beginning of the year. The daily average trading value of ETFs this year has increased to around 17.5 trillion won, more than triple last year's 5.5 trillion won. The share of ETF daily average trading value in the KOSPI has expanded from 44% last year to about 60% this year.

Lee Jaewon, a researcher at Yuanta Securities, analyzed, "The main net buyers accompanying the recent KOSPI all-time high rally are financial investors. Individual net buying of ETFs leads to purchases of underlying assets by liquidity providers (LPs) and financial investment (authorized participants, APs), and in the Korea Exchange's trading trend statistics by investor type, this is recorded as net purchases by financial investment." He added, "Since 2025, the main force behind the KOSPI's challenge to the 7,000-point level has been financial investment-focused supply and demand, and ETF AUM is soaring."

In addition to ETFs, the principal amount set in equity funds is also increasing, as more individuals are investing through indirect products. Lee explained, "Unlike AUM, which fluctuates depending on performance (returns), changes in principal indicate new capital inflows," adding, "As of the end of April, the principal of public equity funds stood at 142 trillion won, and that of equity funds at 260 trillion won—up by 170% and 98%, respectively, compared to early 2025. Individuals, who previously preferred direct investment, are now increasingly investing through products rather than trading directly."

Since April, the return of foreign investors has driven the KOSPI to break through the 7,000-point level. Over the past month, foreigners made net purchases of 4.8424 trillion won in the KOSPI market. Previously, foreigners made net purchases of 1.185 trillion won in January this year, but sold 21.0731 trillion won in February and 35.8806 trillion won in March. As a result, the cumulative total for this year is a net sale of 52 trillion won.

In particular, on May 4, foreigners made net purchases of 2.9457 trillion won, marking a record-high net purchase from the first trading day of the month. Han Ji-young, a researcher at Kiwoom Securities, analyzed, "The 2.9 trillion won net purchase by foreigners ranks as the third-largest since 2000, following 3.1 trillion won on October 2, 2025, and 3 trillion won on February 12 this year." She added, "It is significant in that foreigners, who have more market influence than other participants in terms of investor sentiment, led the record highs in semiconductors despite concerns about a short-term peak."

Expansion of net inflows from foreigners is also expected with the introduction of omnibus accounts for foreign investors. According to the industry, Samsung Securities has partnered with the U.S. online brokerage platform Interactive Brokers (IBKR) to pilot a service that allows foreign investors to trade Korean stocks via local brokerage firms. Ko Yeonsu, a researcher at Hana Securities, said, "With solid profit growth expected centering on the semiconductor sector, attention should be paid to the possibility of an expanded foreign investor base as access for overseas individual investors improves via global online brokerage platforms like IBKR." She added, "Based on profit growth in the semiconductor sector, the inflow of foreign capital into the domestic stock market is expected to continue."

The expansion of foreign capital inflows is a factor that raises expectations for further KOSPI gains. Kim Daejun, a researcher at Korea Investment & Securities, pointed out, "The return of foreigners, who wield significant influence over index direction, is a factor that allows for the expectation of further KOSPI gains."

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