Overseas investors' net selling reaches W199tr as analysts warn sustained outflows pose greater threat than chip earnings
Foreign investors' relentless selloff sent South Korea's Kospi tumbling nearly 6 percent Tuesday, briefly pushing the benchmark below 6,000 as sustained capital outflows overshadowed strong semiconductor earnings and deepened concerns over the market's outlook.
The Kospi stood at 6,007.37 as of 3 p.m., down 5.98 percent, or 381.75 points, after touching an intraday low of 5,974.03 around noon.
The benchmark has shed more than 1,000 points over the past five trading sessions, retreating from above 7,000. The rout has erased more than 800 trillion won ($595.5 billion) in market capitalization, bringing the total below 5,000 trillion won.
Foreign investors sold a net 2.2 trillion won worth of Kospi shares Tuesday, bringing their net selling this month to nearly 8 trillion won. Overseas investors have unloaded a net 199 trillion won worth of shares this year, including about 177 trillion won in the first half. Selling eased in July and August before accelerating again in September, when outflows reached 21.5 trillion won.
The sustained withdrawals have raised questions about whether foreign investors are simply taking profits after the market's earlier rally or reassessing their exposure to Korean equities.
The plunge triggered a sell-side sidecar at 9:37 a.m., temporarily suspending program-trading sell orders for the first time since Aug. 19.
Semiconductor heavyweights led the losses, with Samsung Electronics falling 5.99 percent and SK hynix plunging 8.79 percent.
The selloff followed overnight weakness in US technology stocks, with Nvidia falling 1.3 percent, Micron Technology losing 3.9 percent and the Philadelphia Semiconductor Index dropping 2.67 percent.
Concerns over Chinese memory chipmaker ChangXin Memory Technologies, or CXMT, added to the pressure. The company reportedly plans to introduce server DDR5 memory chips using a more compact cell design by year-end, potentially improving production efficiency and cost competitiveness.
But analysts said persistent foreign selling posed a greater threat to Korean equities than the latest developments in the semiconductor industry.
Heo Jae-hwan, an analyst at Eugene Investment & Securities, said foreign selling pressure in Korea was more than three times as intense as in Taiwan relative to market size.
Taiwan's stock market has gained more than 70 percent this year, compared with the Kospi's 51 percent rise as of Monday's close.
"The outflows are too large to be attributed solely to portfolio rebalancing after the rally," Heo said, adding that domestic investors would need to absorb the selling pressure.
That could prove difficult, with retail investors remaining cautious after July's market decline and institutional investors, including the National Pension Service, having limited room to increase their holdings.
Lee Jae-won, an analyst at Yuanta Securities, said foreign fund flows had become a greater concern than semiconductor earnings.
"Samsung Electronics' third-quarter operating profit exceeded market expectations, and memory prices and investment in AI infrastructure remain firm. However, persistent foreign selling is weighing on the Kospi's performance relative to other markets," Lee said.
Higher interest rates, rising oil prices and geopolitical uncertainty have intensified the pressure, but analysts said these factors alone could not explain the sustained withdrawals.
Korea's heavy dependence on memory chipmakers has also left its market vulnerable to shifts in semiconductor sentiment. US and Taiwanese equities, by contrast, benefit from broader exposure to artificial intelligence services, infrastructure and advanced chip manufacturing.
Han Ji-young, an analyst at Kiwoom Securities, said concerns over CXMT and weakness in US semiconductor stocks were amplifying volatility. She identified the Kospi's 200-day moving average as an important support level.
"Given that the Kospi has fallen nearly nine percent over the past four trading sessions and its forward price-to-earnings ratio has dropped below five, a short-term technical rebound is possible," Han said.
By Choi Yeon-jae (ch0221@heraldcorp.com)
