Daily Cell Korea... KOSDAQ, Foreigners' Market Cap Share Drops to Single Digits

by Ko Hyeonggwang

Published 15 Apr.2020 12:45(KST)

Updated 15 Apr.2020 12:57(KST)

On the 6th, a dealer was busy working in the KB Kookmin Bank dealing room in Yeouido, Seoul. On that day, the KOSDAQ index opened at 579.25, up 6.24 points (1.09%) from the previous trading day. Photo by Moon Honam munonam@

[Asia Economy Reporter Koh Hyung-kwang] The proportion of foreign investors' market capitalization holdings in the KOSDAQ market has fallen below 10% for the first time in 3 years and 5 months. This is interpreted as a result of continuous selling of stocks by foreign investors in the domestic stock market since the outbreak of the novel coronavirus disease (COVID-19), leading to a decrease in their share.

According to the Korea Exchange on the 15th, as of the previous day's closing price, foreign investors held 21.9464 trillion KRW out of the total KOSDAQ market capitalization of 223.9125 trillion KRW. The share ratio based on market capitalization is 9.80%. It is the first time in about 3 years and 5 months since October 25, 2016 (9.99%) that the foreign ownership ratio in the KOSDAQ market has fallen below 10%.

The foreign ownership ratio in KOSDAQ peaked at 14.50% on January 15, 2018, and has been declining since. This year, it gradually decreased after reaching a peak of 11.10% on the 20th of last month, falling below 10% on the 8th of this month (9.97%), and has remained in the 9% range for five consecutive days since. Foreign investors have net sold 2.62 trillion KRW in the KOSDAQ market over the past year, with more than 60% of that amount, 1.65 trillion KRW, sold this year alone.

Over the past year, the stock most sold by foreign investors in the KOSDAQ market was Celltrion Healthcare, totaling 820 billion KRW. Helixmith (320 billion KRW) and Ananti (210 billion KRW) also saw sell-offs in the 200 to 300 billion KRW range. Medytox (180 billion KRW), Seegene (160 billion KRW), Patron (110 billion KRW), SFA (90 billion KRW), Meshion (85 billion KRW), and HLB (78 billion KRW) were also among the top stocks sold by foreign investors.

In the KOSPI market, with a market capitalization of 1,248 trillion KRW, foreign holdings have decreased to 463 trillion KRW, with a share ratio dropping to 37.07%. Before the spread of COVID-19, the share ratio fluctuated around 39% in January but gradually declined to the 37% range.

Lee Kyung-min, a researcher at Daishin Securities, said, "Foreign investors have been net sellers for 29 consecutive trading days in the KOSPI market, indicating a continuous outflow of foreign funds." He added, "Foreign investors react sensitively to global financial market trends, and considering that the direction of the domestic stock market is especially determined by their supply and demand, an adjustment in the domestic stock market due to COVID-19 is inevitable."