Foreign investors dump Korean stocks at record pace, outpacing financial crisis and COVID selloffs

Foreign investor flows on the Kospi have swung more widely in the first half of this year than at any point since the IMF foreign-exchange crisis. A single-day net selling record of nearly 7.8 trillion won ($5.06 billion) was set alongside a separate single-day net purchase record in the 3 trillion won range, pushing both extremes of the buy-sell ledger into record territory.

According to Korea Exchange, foreign investors net sold 7.76 trillion won worth of shares on the main board on Sunday, the largest single-day net selling figure on record since Jan. 20, 1998. The previous record was 7.08 trillion won, set on Feb. 27.

Sunday's selling was concentrated in large-cap semiconductor stocks. Foreign investors net sold 3.87 trillion won of Samsung Electronics and 3.3 trillion won of SK hynix, offloading a combined 7.17 trillion won in the two names. That accounted for 92.4 percent of total foreign net selling on the Kospi that day, meaning virtually all of the outflow came from the two semiconductor giants.

Foreign ownership in both companies also fell to multi-year lows. Samsung Electronics' foreign ownership rate dropped to 47.01 percent on Sunday, the lowest since Nov. 13, 2009 — about 16 years and seven months ago — when it stood at 46.95 percent, shortly after the global financial crisis. SK hynix's foreign ownership rate fell to 50.44 percent, its lowest since May 24, 2023, when it was at 50.21 percent.

The intensity of foreign selling this year has exceeded that seen during past financial crises and the COVID-19 shock. All 20 of the largest single-day foreign net selling figures on the Kospi since 1998 have occurred in 2026. Selling pressure has been concentrated in May and June: foreign investors net sold 44.71 trillion won in May, then surpassed that figure through Sunday this month with 44.8 trillion won, already setting a new monthly net selling record.

Despite the scale of the selling, the Kospi's decline was relatively contained. The index closed Sunday down 16.56 points, or 0.2 percent, at 8,394.65. The won-dollar exchange rate, however, absorbed more of the shock, closing the week's trading session at 1,545.2 won per dollar — up 13.2 won from the previous session and the highest level since March 9, 2009, when it reached 1,549.0 won.

Market analysts, however, view the recent wave of heavy foreign selling as end-of-half rebalancing rather than a fundamental shift. The prevailing interpretation is that profit-taking has concentrated as foreign funds trim their overweight positions in Samsung Electronics and SK hynix — both of which surged sharply since the start of the year — to bring portfolio allocations back in line. From the foreign investors' perspective, the selling reflects both a desire to reduce semiconductor exposure after large share price gains and a move to lock in first-half performance.

Despite the record foreign outflows, the market opened higher Monday. All three major US indexes — the S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average — closed higher on the New York Stock Exchange on Sunday, lending support to the domestic market. Han Ji-young, a researcher at Kiwoom Securities, said that "as June trading days wind down, end-of-quarter and end-of-half rebalancing could weigh on semiconductor stock flows in the latter part of the session, capping the upside," and added that the domestic market "opened higher, buoyed by a sharp intraday rebound in US semiconductor stocks and easing pressure from US 10-year Treasury yields."

Separately from the foreign flow deterioration, the outlook for the semiconductor sector remains broadly favorable. Kim Hyeong-tae, a senior researcher at Shinhan Investment, and colleague Song Hye-su wrote in a Samsung Electronics report that "while overall capital expenditure timelines are being pulled forward, a demand-exceeding environment is expected to persist," adding that they had raised their annual earnings estimates for 2026 and 2027 by 3 percent and 18 percent, respectively, "to reflect stronger-than-expected price momentum."

The two researchers also said of SK hynix that "the pace of commodity DRAM price increases in the second half is expected to exceed earlier estimates," forecasting that the company stands to be "the biggest beneficiary during the HBM3E and HBM4 price-hike cycle."