Foreign investors are exiting the South Korean stock market at a record pace, despite its strong performance this year. Data from The Kobeissi Letter, dated May 21, shows that foreign investors have net sold approximately $22 billion worth of South Korean stocks so far in May. If this trend continues through month-end, it would set a historical record for monthly foreign capital outflow. For the year to date, overseas investors have cumulatively sold off around $60 billion worth of stocks in the KOSPI (Korea Composite Stock Price Index), also on track to break the annual record for the largest net selling. The sell-off has been heavily concentrated in leading semiconductor companies. Samsung Electronics and SK Hynix are the primary targets of the foreign divestment. SK Hynix alone has seen about $20 billion in foreign selling since the start of the year, with roughly $12 billion of that occurring in May alone. Since November 2025, the cumulative net outflow of foreign capital from SK Hynix has reached approximately $26.7 billion. The scale of this capital flight is particularly noteworthy because foreign investors hold a significant position in the South Korean market, accounting for about 39% of the total market capitalization of the KOSPI. Analysis points out that such large-scale, sustained selling indicates that foreign investors are systematically reducing their exposure to South Korean equity assets, rather than merely making structural portfolio adjustments. It is worth noting that this selling activity is occurring against the backdrop of generally robust performance in the South Korean stock market. This divergence, characterized by "selling on strength," reflects deep-seated caution among foreign investors regarding the prospects of the South Korean market.
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