KOSPI rebounds as retail investor inflow offsets foreign selling

A dealer works in the Hana Bank dealing room in Seoul, Wednesday. KOSPI rose 200.86 points, or 2.63 percent, from the previous session to close at 7,844.01, marking a closing record high. Yonhap

KOSPI, which briefly fell to the 7,400 range on foreign investor selloff on Wednesday, reversed course to close at a record high above the 7,800 mark on strong buying from retail and institutional investors.

The country's benchmark index opened at 7,513.65, down 1.69 percent, or 129.50 points, from the previous session. Losses deepened in early trading, pushing the index as low as 7,402.

Sentiment later improved, however, with KOSPI recouping its earlier declines and climbing above the 7,800 level intraday before closing at 7,844.01, up 200.86 points, or 2.63 percent, from the previous session.

The weak start followed an overnight decline in U.S. semiconductor shares, which dragged down the Philadelphia Semiconductor Index and pressured Korean equities from premarket trading.

Among heavyweight stocks, Samsung Electronics dropped sharply earlier in the session, plunging nearly 6 percent after labor-management talks broke down and U.S. chip stocks weakened overnight. The stock later pared most of its losses, fluctuating around the flat line before ending 1.79 percent higher at 284,000 won ($190).

KOSPI had repeatedly set record highs and come close to the 8,000 level in recent sessions, but fell by more than 2 percent the previous day as foreign investors staged a massive selloff, unloading more than 5 trillion won in local shares.

Investor sentiment weakened amid rising geopolitical uncertainty in the Middle East, concerns over labor strike risks at Samsung Electronics and controversy surrounding remarks by Kim Yong-beom, presidential chief of staff for policy, regarding artificial intelligence (AI)-related profits and a national dividend.

In a Facebook post Monday, Kim said benefits created in the AI infrastructure era were not generated solely by a handful of companies, while mentioning the possibility of introducing a national dividend system that would return excess gains generated from the AI industry to the public.

The remarks quickly triggered backlash, particularly from opposition parties, after the stock market reacted negatively and KOSPI fell. In response, the presidential office said Kim’s comments reflected his personal views and had nothing to do with any internal policy discussions.

President Lee Jae Myung addressed the controversy on X, formerly Twitter, on Wednesday, saying Kim’s remarks referred to reviewing ways to redistribute additional tax revenues generated from excess profits in the AI sector. Lee also dismissed reports suggesting the proposal involved redistributing corporate profits themselves, calling such interpretations “fake news intended to manipulate public opinion.”

Investor concerns were further amplified after Iran announced plans to broaden and tighten its control over the Strait of Hormuz beyond the area designated before the war. Comments from U.S. President Donald Trump suggesting that the blockade against Iran could continue for an extended period also pressured market sentiment.

Still, local brokerages expect KOSPI’s broader rally to resume, citing continued inflows from retail investors and solid earnings momentum.

“Key drivers of the bull market, including the ongoing shift of capital into equities, improving corporate profits and supportive valuations, remain intact,” said Han Ji-young, an analyst at Kiwoom Securities, advising investors to continue favoring AI-related value chain stocks, especially semiconductor shares.

Meanwhile, secondary bourse Kosdaq also started lower, opening down 2.86 points, or 0.24 percent, at 1,176.43. Although it briefly moved into positive territory during trading, it later reversed course and ended at 1,176.93, down 2.36 points, or 0.2 percent, from the previous session.

In the Seoul foreign exchange market, the Korean won weakened against the U.S. dollar, opening at 1,493.8 won per dollar, worsening by 3.9 won from the previous session. The currency later trimmed losses to close at 1,490.6 won in onshore trading, down 0.7 won.

Oil prices extended their gains as uncertainty persisted over stalled negotiations between Washington and Tehran.

Brent crude futures for July delivery traded above $106 a barrel, while June West Texas Intermediate crude futures remained above $101 a barrel, keeping both major benchmarks firmly above the $100 mark.