South Korea’s stock market plunged sharply, but a shift toward buying by foreign investors served as a buttress for the Kospi index at the 6,500 level. While foreign ownership of Samsung Electronics (005930) fell to its lowest point in 17 years since the 2009 financial crisis, securities analysts suggest the selling wave may have passed its peak.

According to the Korea Exchange on the 20th, the Kospi closed down 4.46% from the previous session at 6,516.27. The index briefly dipped to 6,515.24 intraday, threatening a breakdown below the 6,500 threshold, but foreign investors recorded net purchases of ₩516.1 billion, defending the downside. Earlier in the morning, Kospi 200 futures fell more than 5%, triggering the 20th sell-side circuit breaker of the year.

Foreign investors have maintained a net selling stance this month, offloading a net ₩11.64 trillion (approximately $7.9 billion) in the Kospi market. This marks a third consecutive month of net selling, following record monthly net outflows in both May and June. Cumulative net selling over the three months since May totals approximately ₩105 trillion.

However, the intensity of the selling is gradually easing. Net selling, which reached ₩19.84 trillion (approximately $13.4 billion) in the first week of the month (June 29–July 3), plummeted to ₩4.12 trillion (approximately $2.8 billion) in the second week (July 6–10), and flipped to net buying of ₩215 billion (approximately $145.1 million) in the third week (July 13–16). During the session, as of 1:52 p.m., foreign investors had net purchased ₩142.8 billion (approximately $96.4 million), absorbing sell orders from retail and institutional investors.

Portfolio rebalancing needs are cited as the backdrop for the massive foreign sell-off. Analysts note that foreign investors, who aggressively accumulated Kospi stocks from the early stages of the bull market, saw the weightings of so-called “Sam-Jik” stocks—Samsung Electronics and SK Hynix (000660)—become excessively large, reaching inclusion limits and making profit-taking and weighting reductions unavoidable.

Indeed, as of this session, foreign ownership of Samsung Electronics fell to 46.56%, the lowest level in 17 years since the 2009 financial crisis. With the semiconductor sector’s earnings power remaining solid and valuations having compressed, securities analysts are focusing on the possibility that foreign rebalancing-driven selling is entering its final phase.

Among individual stocks, Samsung Electronics closed down 2.94% at ₩247,500 (approximately $167.02), while SK Hynix fell a relatively modest 1.90% to ₩1.81 million (approximately $1,219.40). In contrast, Samsung Electro-Mechanics (009150) was the only major large-cap stock to show strength, rising over 1%. By sector, insurance (down ~8%), machinery and equipment (down ~6%), and distribution and transportation equipment and parts (down ~5%) posted the steepest declines.

The Kosdaq market fell even more sharply than the Kospi. The Kosdaq index closed down 4.22% at 758.46, threatening the 750 level. A sell-side circuit breaker—the 10th this year—was also triggered on the Kosdaq at 10:52 a.m. as Kosdaq 150 futures fell more than 6% and the Kosdaq 150 index dropped over 3%. Among large-cap Kosdaq stocks, most were in the red except for Samchundang Pharm (000250), which surged 29.82%. Alteogen (196170) slipped 0.54%, EcoPro BM (247540) fell 5.78%, and EcoPro (086520) declined 6.87%.

While foreign investors turned net buyers on the Kospi, retail and institutional investors net sold ₩53.2 billion (approximately $35.9 million) and ₩120.7 billion (approximately $81.5 million), respectively, adding downward pressure on the index. Program trading recorded a net buying bias of ₩327.6 billion (approximately $221.1 million), combining both arbitrage and non-arbitrage transactions.

Market experts are paying close attention to the fact that foreign ownership ratios, particularly in semiconductor stocks, have fallen to historically low levels. With share prices having undergone sufficient adjustment relative to earnings outlooks, the prevailing sentiment leans toward a gradual return to buying rather than additional large-scale selling. However, with global economic slowdown concerns and domestic and external uncertainties still present, volatile trading conditions are expected to persist for the time being.