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Foreign Investors Dump Korean Stocks in Jan as KOSPI Tops 5,500

Foreign investors became net sellers of South Korean stocks in January, offloading $50 million after heavy purchases in December. This shift was attributed to profit-taking following significant gains in the benchmark KOSPI index, which rose over 22% during the month. Meanwhile, foreign buying of local bonds remained strong, leading to a fifth consecutive month of overall net inflows into Korean securities. In a separate development, the KOSPI briefly surpassed the 5,500-point mark for the first time, driven by sharp rallies in major semiconductor stocks like Samsung Electronics and SK hynix.

Key Points: Foreign Investors Sell Korean Stocks, Buy Bonds in January

  • Foreigners sold $50M in stocks
  • Bought $2.44B in bonds
  • Fifth month of net security inflows
  • KOSPI jumped over 22% in January
  • Semiconductor shares led recent surge
2 min read

Foreign investors shift to net selling of S. Korean stocks in Jan

Foreign investors turned net sellers of South Korean equities in January, driven by profit-taking, while bond inflows continued for a fifth month.

"Equity funds posted a net outflow as profit-taking following recent gains in domestic stock prices outweighed expectations - BOK official"

Seoul, Feb 12

Foreign investors turned into net sellers of South Korean equities in January, driven by profit-taking following recent gains in the benchmark index, central bank data showed on Thursday.

Offshore investors sold a net US$50 million worth of local stocks last month, reversing from their net purchase of $1.19 billion in December, according to the data from the Bank of Korea (BOK).

Foreign investors, meanwhile, bought $2.44 billion worth of bonds in January, resulting in a combined net inflow of $2.39 billion in local securities, marking the fifth consecutive month of net foreign inflows into domestic securities, reports Yonhap news agency.

"Equity funds posted a net outflow as profit-taking following recent gains in domestic stock prices outweighed expectations of better performances of the semiconductor industry," a BOK official said. "Bond funds saw slower net inflows as investor sentiment weakened amid rising market interest rates."

The benchmark Korea Composite Stock Price Index (KOSPI) jumped more than 22 per cent in January.

The central bank also said daily volatility in the won-dollar exchange rate rose to an average of 6.6 won in January from 5.3 won in December.

"Volatility increased as overseas investment by local investors continued, while the National Pension Service recently reduced its target allocation to overseas equities," the official added.

Meanwhile, South Korean stocks surpassed the 5,500-point mark in midday trading for the first time on Thursday, boosted by sharp gains in blue-chip tech shares, including Samsung Electronics and SK hynix.

The benchmark Korea Composite Stock Price Index (KOSPI) had added 157.13 points, or 2.93 percent, to 5,511.62 as of 10:59 a.m. before dropping just below the threshold as of 11:20 a.m.

This marked the first time the KOSPI surpassed the 5,500-point mark.

Semiconductor shares were the main driving force that pushed up the index, with Samsung Electronics shooting up 6.08 percent and SK hynix soaring 3.26 percent.

- IANS

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Reader Comments

P
Priya S
The semiconductor focus is key here. Samsung and SK hynix driving the index reminds me of how a few heavyweights like Reliance or TCS can sway our Sensex. Foreign money is so fickle though – they come for the gains and leave at the first sign of profit. 🤷‍♀️
A
Arjun K
Net selling of $50 million in equities but buying $2.44 billion in bonds? That's a massive pivot to debt. Shows global investors are getting risk-averse or seeking yield. With volatility in the won increasing, bonds probably looked like a safer harbour. Smart move.
S
Sarah B
As someone tracking Asian markets, this is a classic case of "buy the rumor, sell the news" for semiconductors. The data shows the overall inflow into Korean securities is still positive for the 5th month, which is the bigger story. The headline net selling in stocks is a bit misleading.
V
Vikram M
The connection between the National Pension Service reducing overseas equity allocation and increased currency volatility is a nuanced point. It shows how domestic institutional moves can have unintended effects. RBI must deal with similar complexities managing the rupee.
K
Karthik V
Respectfully, while the analysis is good, the article jumps between January data and Thursday's trading action without a clear link. It makes the timeline confusing. Were the foreign sales in January a mistake given the index just hit 5500? The narrative could be tighter.

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