South Korea’s stock market is losing all of its key support pillars. Retail investors are retreating en masse, institutions continue to net sell, and the sole remaining backstop—corporate buybacks by Samsung Electronics and SK Hynix—will run out of ammunition by mid-October. Goldman Sachs analyst Chris Cha issued a clear warning in a September 3 report: once buyback support disappears, KOSPI’s trajectory will hinge almost entirely on foreign capital flows and the South Korean won’s exchange rate.
Goldman Sachs data shows retail net buying in August collapsed 90% from its June peak, plunging from ₩54.5 trillion to ₩5.4 trillion. This means the core momentum that drove KOSPI’s strong first-half rebound has essentially been exhausted. Meanwhile, foreign and local institutional investors also recorded net selling in August, leaving the market propped up almost entirely by corporate buybacks maintaining a veneer of stability.
The report further notes that at the current pace of buyback execution, Samsung and SK Hynix’s buyback allocations will be used up between late September and mid-October—well ahead of both companies’ official November deadlines. Goldman Sachs accordingly advises investors to position early for a potential liquidity shock in October.
Retail Investor Behavior Undergoes a Fundamental Shift
South Korean retail investors, once the most important driving force behind KOSPI’s first-half performance, are undergoing a deep-seated behavioral transformation. Goldman Sachs attributes this shift to three factors.
At the behavioral level, retail investors have switched from their previously aggressive buy-the-dip mode to a conservative strategy of loss aversion and selling into rebounds. At the trading range level, Goldman Sachs observes systematic retail buying concentrated below the KOSPI 6,500 level, while any attempt by the index to break above 7,000 triggers rapid retail unwinding, creating a clear range-capping effect. At the liquidity level, margin balances in brokerage accounts have remained below ₩100 trillion for a full week, indicating that retail investors’ deployable capital is approaching exhaustion.
Fund flow shifts corroborate this trend. Time deposits at South Korea’s top five commercial banks have surpassed ₩1,000 trillion for the first time, with combined inflows of ₩55.83 trillion over July and August—a clear rotation toward safe-haven assets.
Additionally, the leveraged ETF boom that previously attracted massive retail participation has come to an end. With regulators requiring investors to complete a five-hour online course to qualify for leveraged trading, a large swath of momentum chasers has been shut out, and the leveraged ETF bubble has burst accordingly.
Taken together, the current support transmission chain in South Korea’s stock market can be summarized as follows:
Buybacks Are the Only Net Buyer, but Ammunition Is Running Out
With retail, foreign, and local institutional investors all recording net selling in August, the only net buying came from the “other corporates” category—namely corporate buybacks led by Samsung Electronics and SK Hynix.
Goldman Sachs data shows that on a recent trading day, the two companies’ buybacks combined contributed approximately $1.2 billion in net buying, accounting for more than 98% of that day’s “other corporates” category inflows, and have maintained net buying for 12 consecutive trading days. It is this sustained buyback support that has prevented KOSPI from suffering a steeper decline under multi-sided selling pressure.
However, this support has a clear time limit. Samsung Electronics and SK Hynix’s buyback execution windows expire on November 21 and November 19, respectively. But Goldman Sachs, by tracking buyback execution speed, found that because both companies are employing a front-loaded execution strategy, at the current rate of allocation consumption, buyback funds are expected to be exhausted between late September and mid-October—roughly a month ahead of the official deadlines.
The following table shows the shareholder return commitments recently announced by both companies, serving as a reference for buyback magnitude:
CompanyTotal Planned SizeBuyback PortionExecution PeriodAnnouncement DateSamsung ElectronicsUp to ₩110 trillion shareholder returns (including cash dividends)Approximately ₩30 trillion—August 2026SK Hynix₩40 trillion buyback with full cancellation₩40 trillion (committed to returning over 50% of free cash flow)2025–2027August 19, 2026
Note: Samsung Electronics data sourced from CNBC and Businesskorea reports; SK Hynix data sourced from the company’s official announcement via PR Newswire on August 19, 2026.
Goldman Sachs warns that when buybacks end, the market’s secondary support will once again depend on regular institutional fund flows—and institutional willingness to participate at current price levels is clearly insufficient, exposing KOSPI to significant liquidity vacuum risk.
Foreign Capital Becomes the Key Variable for the Second Half
With retail buying exhausted and the corporate buyback window nearing its close, foreign net inflows have become the most critical structural variable for KOSPI’s second-half trajectory.
Recent trends show foreign net selling pressure is easing. In May and June, foreign investors net sold ₩44.7 billion (approximately $33.0 million) and ₩48.6 billion (approximately $35.9 million), respectively. By July and August, net selling had narrowed to approximately ₩9.9 billion (approximately $7.3 million) and ₩10 billion (approximately $7.4 million), indicating that selling momentum has clearly weakened.
The currency environment is also turning more favorable. The South Korean won has appreciated 12.9% from its mid-year low, with USD/KRW falling from 1,561.50 to 1,359.15. Although the correlation between USD/KRW and KOSPI has shown some divergence recently, Goldman Sachs believes a stronger won overall still provides more favorable currency conditions for global asset reallocation into South Korean equities.
Note: Market developments are ongoing. Korea Exchange data shows that on September 2, KOSPI plunged 3.99% to 6,562.72 points, dragged down by rising international oil prices and U.S. Treasury yields, with foreign investors net selling approximately ₩1.91 trillion and institutions net selling approximately ₩2.04 trillion that day. On September 4, the index rebounded 1.64% to 6,687.21 points, driven by foreign net buying for two consecutive trading days (approximately ₩479.3 billion that day). The won briefly broke below ₩1,350 against the dollar intraday before closing at ₩1,350.4—the first breach of that level in 14 months—representing an appreciation of approximately 13.4% from the year-to-date high of ₩1,559.2 on July 1. (Sources: Asia Economy report on September 2; MoneyToday report on September 4)
Goldman Sachs has formulated three execution strategies based on this analysis: trim positions near the KOSPI 7,000 level, where retail investors’ breakeven selling pressure is expected to form significant resistance; position ahead of elevated volatility after buybacks conclude in October; and closely track foreign capital rotation among semiconductor leaders to capture structural opportunities arising from won appreciation and stabilizing foreign net selling trends.
The following table summarizes key data from the Goldman Sachs report:
IndicatorDataRetail net buying in August₩5.4 trillion (down 90% from ₩54.5 trillion in June)Foreign net selling May–June₩44.7 billion, ₩48.6 billionForeign net selling July–AugustApproximately ₩9.9 billion, ₩10 billionWon appreciation12.9% (USD/KRW from 1,561.50 to 1,359.15)Estimated buyback exhaustionLate September to mid-OctoberSamsung buyback window expiryNovember 21SK Hynix buyback window expiryNovember 19
Note: Data sourced from Goldman Sachs report dated September 3.
For investors in South Korean equities, the next two months will be a critical observation window. The fading of buyback support and the shift in foreign capital flows will largely determine whether KOSPI can hold current levels in the absence of retail momentum—or whether a more violent correction lies ahead.