Foreign Investors’ Market Cap Tops 2 Quadrillion Won for the First Time, Fueled by Semiconductor Rally [Korean Stock Market Grows Larger]

Foreign investors’ holdings in Korean stocks have topped 2 quadrillion won for the first time ever. The surge was largely driven by the swelling market capitalization of leading semiconductor stocks, which have attracted the most net buying as the KOSPI Composite Index continues to hit record highs day after day.
According to the Korea Financial Investment Association (KOFIA) on the 28th, foreign investors’ market capitalization in the KOSPI Composite Index stood at 2,004.3536 trillion won as of the 23rd, setting an all-time high. This was the first time it had exceeded 2 quadrillion won. On the same day, foreigners’ share of the KOSPI Composite Index also reached 37.75%, coming close to the previous record of 39.26% set on Feb. 14, 2020. In the KOSDAQ, foreign investors’ market capitalization rose to 68.1289 trillion won, nearly matching the previous record of 68.8134 trillion won set on the 6th of last month. Combined, the total came to 2,072.4825 trillion won.
The main reason is the strong share-price performance of stocks with large foreign ownership. As of the previous day’s close, the KOSPI Composite Index stocks with the largest foreign holdings were Samsung Electronics Co., Ltd. at 646.4045 trillion won, SK hynix Inc. at 488.9538 trillion won, Samsung Electronics Co., Ltd. Preferred Shares at 100.237 trillion won, and SK Square Co., Ltd. at 52.0462 trillion won. From the start of this month through the previous day, their share prices rose 34.27%, 60.10%, 40.44%, and 69.13%, respectively.
The market value of foreign-held stocks is expected to rise further. Foreign investors have bought about 3.2098 trillion won worth of shares this month, and the KOSPI Composite Index has continued its rally, briefly breaking above the 6,700 level during trading. On this day, the index climbed as high as 6,712.73 intraday. It closed at 6,641.02, up 25.99 points, or 0.39%, from the previous session. The stocks foreigners net bought this month include SK hynix Inc. at 1.3717 trillion won, Doosan Enerbility at 1.1085 trillion won, Samsung Electronics Co., Ltd. at 1.0404 trillion won, and Samsung Electronics Co., Ltd. Preferred Shares at 503.9 billion won.
Foreign investors are indeed betting on gains in the Korean stock market. Over the past week, the exchange-traded fund they bought the most was the Mirae Asset TIGER MSCI Korea Total Return ETF, which invests in index gains, with purchases totaling 510.1 billion won. They also bought domestic market index-tracking ETFs such as the KODEX Leverage ETF, worth 51.8 billion won, and the TIGER Leverage ETF, worth 22.3 billion won.
Han Ji-young, a researcher at KIWOOM Securities Co., Ltd., said, "Foreign investors, who had been net sellers last month, have turned to net buying this month and are driving the index higher." She added, "The growing expectation for earnings centered on the domestic semiconductor sector appears to have stimulated foreign buying."
Brokerages expect foreign buying to continue as the artificial intelligence (AI) industry cycle remains intact.
However, the end of earnings season and the possibility of interest-rate fluctuations stemming from developments in the Middle East are seen as variables. Kim Yong-gu, a researcher at Yuanta Securities Korea Co., Ltd., said, "In May, volatility in both domestic and overseas stock markets and interest rates is expected to increase, driven by rising international oil prices, inflation pressures, and concerns over prolonged high interest rates."
Meanwhile, at the State Council of South Korea on the same day, President Lee Jae Myung said, "The Financial Services Commission has been reorganizing the financial system, and a significant effect is emerging as the stock market is being normalized." He added, "Our stock market is still undervalued compared with those of other countries," reiterating his commitment to normalizing the stock market.
yimsh0214@fnnews.com Lim Sang-hyeok Reporter