Corporate buybacks prop up KOSPI despite broad investor selling

Seoul stocks eked out modest gains Tuesday, as corporate buying helped the KOSPI hold above 6,800 despite net selling by retail, foreign and institutional investors.

The benchmark index opened at 6,784.29, down 0.52 percent from the previous session, and extended its losses early in the day before gradually recovering to trade around the flat line. It ended at 6,835.8, up 0.23 percent.

All three major investor groups were net sellers. Foreign investors offloaded 486.7 billion won ($355 million) worth of shares, while institutional and retail investors sold 634 billion won and 539.7 billion won, respectively.

Companies, classified separately from the three main investor groups, provided a counterweight, purchasing a net 1.62 trillion won. Much of that buying was believed to have come from share buybacks by Samsung Electronics and SK hynix.

Samsung Electronics rose 0.38 percent to 261,000 won, while SK hynix gained 1.14 percent to 1.69 million won.

Analysts said corporate buying could provide a short-term floor for the market but was unlikely to drive a sustained rally.

“Corporate investors, including companies buying back their own shares, are serving as a buffer at a time when there is no clear dominant buyer amid macroeconomic pressures,” said Kang Jin-hyuk, an analyst at Shinhan Securities. “But buybacks do not provide a catalyst for further gains, which means that a return to net buying by foreign investors is essential once external uncertainties ease.”

Foreign investors’ cumulative net selling of Korean stocks this year has approached a record 170 trillion won, roughly 36 times their 4.65 trillion won net selling last year.

Selling in the first half was driven largely by profit-taking and portfolio rebalancing after the KOSPI’s steep gains due to large-cap semiconductor stocks. More recently, however, concerns about higher U.S. interest rates and rising long-term Treasury yields have fueled risk aversion, making emerging-market assets less attractive in a higher-for-longer rate environment.

Overnight weakness on Wall Street also weighed on sentiment after renewed military clashes between the United States and Iran put pressure on oil prices. The Dow Jones Industrial Average fell 0.70 percent, while the S&P 500 and Nasdaq Composite lost 0.33 percent and 0.12 percent, respectively.

The secondary bourse Kosdaq fared worse, opening 0.28 percent lower at 831.96 and remaining in negative territory throughout the session. It closed at 821.25, down 1.56 percent, as major biotech stocks including Alteogen, HLB and PharmaResearch fell.

In the Seoul foreign exchange market, the won weakened slightly against the dollar, closing at 1,370.4, down 1.8 won from the previous session.