Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
'Sell Korea' continues amid weakening growth momentum in Asia
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By Anna J. Park
By Anna J. Park
Foreign investors' selling spree of Korean stocks has been continuing this year, as the combined amount of their net-selling of local stocks so far this year reaches 31 trillion won ($26 billion), far exceeding that of last year.
According to the Korea Exchange (KRX), foreign investors net-sold a total of 30.7 trillion won worth of stocks listed on both the main benchmark KOSPI and tech-heavy Kosdaq from the start of the year until last week. The amount combined already surpasses the entire 24.7 trillion won net-sold last year.
By month, foreign investors net-sold local stocks for seven months this year, except April when they net-purchased 82.9 billion won. In August alone, they net-sold 6.5 trillion won worth of Korean stocks. Due to their selling frenzy, KOSPI's rate of return this month ― minus 4.43 percent ― is the lowest among 20 major countries' stock market returns for August.
With the continued net-selling, foreign investors' stake out of the entire market cap of Korean stocks has also dwindled to around 32 percent this month, down from 35 percent earlier this year.
The Korean won's strengthening exchange rate against the dollar is also cited as another factor awakening the selling-off of Korean stocks, said stock analysts, Monday.
The won-dollar exchange rate reached its yearlong peak on Aug. 20 ― 1,179.6 won per dollar ― a 9 percent increase from the start of this year when it stood at 1,183.5 won per dollar. The won's depreciation precipitates another selling spree of Korean stocks.
“Once the U.S.'s tapering officially begins within this year, the money exodus from the emerging market could accelerate,” said Kim Hak-gyun, research head at Shinyoung Securities.
The continuing resurgence of the Delta variant of the coronavirus in Korea, as well as growing uncertainty over China's strengthened business regulations, have also played havoc on the forecast of Korean stocks' profitability.
“The current exodus of foreign money is caused by multiple factors, including tapering concerns, China risks as well as the worsened pandemic situation in Korea. In order for foreign investors to come back, an overall economic growth momentum in Asia market seems to be necessary,” Park Sang-hyun, chief economist at Hi Investment & Securities, said over the phone. “It seems they're worried whether the Korean economy's third-quarter growth might be slowed due to the prolonged COVID-19 situation in the nation.”