May turned out to be pretty dramatic for South Korean stock market,and honestly,this foreign selling number is not small thing ah . When offshore investors start dumping shares at record level,it usually tells you mood has changed badly.
Data from Korea Exchange (KRX) showed foreign net selling of shares listed on benchmark Korea Composite Stock Price Index (KOSPI) hit all-time high in May . Offshore investors sold 44.71 trillion won (approximately US$29.66 billion ) worth of local stocks,beating previous record of 35.74 trillion won set in March.
And this was not just one bad day type thing . Between May 7 and May 29,foreign investors kept net selling for 16 consecutive trading sessions. That is longest stretch since February 2009,which was around aftermath of global financial crisis . So yes,market people are obviously taking it seriously.
But interesting part is,retail investors went opposite direction only . While foreign money was moving out,retail investors bought net 36.09 trillion won worth of stocks,which also became record for monthly net buying .
Few things standing out clearly here:
- Foreign investors sold 44.71 trillion won (approximately US$29.66 billion ) in KOSPI shares in May .
- Retail investors bought net 36.09 trillion won worth of stocks.
- Foreign investors also bought net 2.8 trillion won in KOSDAQ stocks.
Analysts are saying this foreign sell-off may be linked to profit-taking after tech stocks rallied hard,especially chipmaker names like Samsung Electronics Co. and SK hynix Inc . . And honestly,that explanation makes sense because when big stocks run up too much,foreign funds often take money off table fast.
At same time,KOSDAQ market showed different picture . Foreign investors acquired net 2.8 trillion won worth of shares there,apparently helped by newly launched investment fund offering tax benefits and loss protection. That fund is aimed at sectors such as artificial intelligence and biotechnology,so money has not fully left Korean market,just shifted in strange way.
But volatility part is where things feel uncomfortable . KOSPI has been rallying toward 9,000-point threshold,and finished month at record high of 8,476.15 . Still,KOSPI 200 volatility index,or VKOSPI,closed at 74.26,up 3.72 percent from previous session.
And this is problem with markets sometimes . Index may look strong from outside,but gains getting concentrated in few heavyweight stocks can make whole thing shaky underneath.
So foreign investors are selling KOSPI at record level,retail investors are buying like crazy,KOSDAQ is pulling in money,and volatility is rising at same time… makes you wonder whether this rally is actually strong,or just looking strong from top…
