Key Focus on Foreign Selling Spree... "Need to Watch the Next 2 to 3 Weeks"

[Anchor]

Experts say we need to monitor the stock market for another two to three weeks to see how it will move from here. In particular, we should closely watch whether the selling trend by foreign investors will stop and whether our stock market has the capacity to absorb those foreign sell-offs.

Reporter Kim Beom-joo has more.

[Reporter]

The recent plunge in the KOSPI was largely due to domestic investors' failure to digest the shares dumped by foreign investors.

Foreigners net sold a total of 18 trillion won worth of stocks over seven trading days from October 6 to October 15. As individuals and institutions net bought only about 13 trillion won, the KOSPI tumbled by 20%.

The first half of the year was different.

From May 28 to June 5, foreigners unloaded more than 22 trillion won in stocks in just six days, but individuals and institutional investors absorbed all of that volume, allowing the KOSPI index to hold its ground.

It is not uncommon for foreign investors to withdraw their money from South Korea and semiconductors to invest in other countries and sectors.

However, domestic pension funds have currently maxed out their limits for stock investments, and retail investors' purchasing power has also noticeably weakened.

[Kim Dong-won / Head of Research, KB Securities: The intensity of foreigners selling 3 trillion won a day back then (in May and June) is completely different from selling 3 trillion won now. That is because the supply-demand balance (domestic buying capacity) is thin.]

Outlooks are divided.

While some analyses suggest that foreign investors could return as the earnings of Samsung Electronics and SK Hynix remain robust, opposing views argue that investors, already sensitive to high interest rates and inflation, might distance themselves from the stock market for a while.

[Lee Jae-man / Head of Global Investment Analysis, Hana Securities: What was the U.S. interest rate level when foreigners bought Korean stocks? It was around 4.5%. With U.S. rates now exceeding 5%, it will likely not be easy for foreigners to buy our (stocks).]

As a result, attention is focused on what kind of shareholder return policies Samsung Electronics and SK Hynix will present as they begin investor relations sessions starting on the 28th.

Furthermore, the U.S. Federal Reserve's rate decision on the 29th and the earnings releases of major U.S. tech companies on the 30th are expected to be critical turning points.

Until these situations are sorted out to some extent, the stock market will need to take a breather for the next two to three weeks.
※ Please note: This article was translated by AI and may contain errors.