KOSPI Has Risen Too Much... 600 Billion Won Pulled Out of Foreign ETF in a Single Day

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[Financial News] About 600 billion won was withdrawn in a single day from a Korean exchange-traded fund (ETF) listed on the U.S. stock market. The rally in KOSPI this year, which has surged more than 75%, appears to have prompted some investors to lock in profits. According to foreign media reports on the 8th, 409 million dollars, or about 600 billion won, flowed out of the iShares MSCI South Korea ETF (EWY), which is managed by BlackRock, the world’s largest asset manager, on the 6th local time. That was the largest outflow in the ETF’s history. The fund also recorded net outflows for five straight trading days through the previous day. The total amount withdrawn during that period exceeded 900 million dollars, or about 1.3 trillion won.
The iShares MSCI South Korea ETF was listed in the United States in May 2000. Its holdings include Samsung Electronics Co., Ltd., SK hynix, SK Square, Hyundai Motor Company and KB Financial Group. As the recent rally has become overheated, some investors appear to have moved to take profits.
KOSPI has climbed more than 75% this year. The gains have been driven by a surge in semiconductor stocks such as Samsung Electronics Co., Ltd. and SK hynix on expectations surrounding Artificial Intelligence (AI). As of the previous day, Samsung Electronics Co., Ltd. and SK hynix had risen 126% and 154%, respectively, this year. When more than 400 million dollars flowed out of the ETF, KOSPI jumped 6.45% and broke above the 7,000 mark for the first time ever.
Todd Sohn, chief ETF strategist at Strategas Securities, said, "The upward momentum in Korean stocks is very strong," adding, "No one knows when this trend will stop, but at such extreme levels, it makes sense to trim some exposure." Ihor Dusaniwsky, head of predictive analytics at S3 Partners, explained that short sellers have expanded bearish positions on Korean stocks, while some investors believe a correction is inevitable after the sharp rally.
Still, sentiment toward Korean equities among global brokerage houses remains upbeat. JPMorgan Chase raised its year-end KOSPI target to 8,500, while Goldman Sachs and Nomura Securities lifted theirs to 8,000.
Stanley Tang, senior portfolio manager at Sumitomo Mitsui DS Asset Management, said, "The rally in Korean stocks has been supported by a number of positive factors," adding, "Memory chip manufacturers posted record earnings on strong AI demand, and shipbuilders benefited from a favorable shipping market and lower steel prices."
fair@fnnews.com Han Young-joon Reporter