Foreign Investors Dump 40 Trillion Won in Shares This Year, While NPS and Retail Investors Prop Up KOSPI

Foreign investors have been aggressively selling in the Korea Composite Stock Price Index (KOSPI) market, yet the index has continued its upward trend. Analysts say that while foreigners have been offloading large volumes of shares, the National Pension Service (NPS) and individual investors have been buying through Exchange-Traded Funds (ETF), effectively holding up the index.
According to the Financial Supervisory Service (FSS) and Koscom Corporation on the 10th, foreign investors’ net selling in the KOSPI market from January 1 to March 9 this year reached 40.7 trillion won. This is several times larger than last year’s full-year net selling on KOSPI, which stood at 9 trillion won. Foreign investors had maintained a net buying stance, purchasing 11.4 trillion won in 2023 and 1.3 trillion won in 2024, but they shifted back to net selling starting last year.
What stands out is that the KOSPI index has risen despite this massive foreign sell-off. Based on closing prices, the KOSPI climbed from 4,309.63 at the beginning of the year to 6,307.27 on the 26th of last month, gaining about 2,000 points in just over two months. Market observers say institutions and retail investors have been absorbing the shares sold by foreigners, thereby supporting the index.
The National Pension Service (NPS) in particular has sharply increased its domestic equity exposure while cutting back on domestic bonds. NPS’s domestic bond investments fell from 344.291 trillion won at the end of 2024 to 304.763 trillion won in 2025, a decrease of 39.528 trillion won. Over the same period, its domestic equity investments jumped from 139.722 trillion won to 263.737 trillion won, an increase of 124.015 trillion won.
Individual investors are also believed to have supported the index’s rise by actively investing in domestic equities through Exchange-Traded Funds (ETF). In particular, ETF investments made via Individual Retirement Pension (IRP) accounts and Individual Savings Accounts (ISA) are seen as a key driver behind the KOSPI’s gains.
The ETF market itself is expanding rapidly. As of the 6th of this month, there were 1,073 ETF funds with total net assets of 376.3551 trillion won. Compared with January 2, 2024, when there were 812 funds with 121.5187 trillion won in net assets, both the number of funds and the asset size have grown significantly. In effect, a structure has emerged in which domestic institutions and retail investors are propping up the index by taking over shares that foreign investors unload through short-term trading. At the same time, some analysts point out that foreign investors have been actively using short selling as volatility in the Korean stock market has increased. Short selling is an investment strategy in which an investor borrows shares and sells them first, then buys them back at a lower price if the stock falls, pocketing the difference as profit. When the KOSPI closed at 6,307.27 on the 26th of last month, the outstanding balance of securities lending transactions stood at 157.9299 trillion won. By the 9th of this month, it had fallen to 136.7865 trillion won. On the 4th, when the KOSPI briefly threatened to fall below the 5,000 level, the balance dropped further to 127.3418 trillion won. The outstanding balance of securities lending transactions represents the amount of stock borrowed in advance for future short selling and is often referred to as a “leading indicator of short selling.” From the 26th of last month to the 9th of this month, Hanjin KAL Corporation was the stock with the highest proportion of short selling trades. During this period, foreign investors accounted for 77.83% of short selling transactions in Hanjin KAL Corporation, and on the 9th, short selling made up 37.2% of its total trading value. Over the most recent seven trading days, short selling volume in Hanjin KAL Corporation has hovered around 30% of total trading volume. The average short selling price over the past month was 133,869 won. Given that the closing price on the 9th was 114,800 won, short sellers are estimated to have earned an unrealized gain of about 16% per share. If they sold at the average short selling price of 133,869 won and bought back at the closing price of 114,800 won on the 9th, they would have locked in a profit of 19,069 won per share.
khj91@fnnews.com Kim Hyun-jung Reporter