KOSPI, once seen as a bargain, remains sluggish... "Foreign investors' return is key"

[Financial News] Although analysts say KOSPI (Korea Composite Stock Price Index) is trading at historically undervalued levels while hovering around the 6,000 mark, foreign investors have not regained their appetite for Korean stocks. Brokerage houses say a recovery in KOSPI will only be possible if foreign buying improves.
On the 11th, the Korea Exchange said foreign investors net sold 1.4886 trillion won in the KOSPI market the previous day.
Foreign investors have continued their selling streak this month, with only one buying day out of six trading sessions through the previous day. Their net selling for the month has reached 7.4351 trillion won.
So far this year, foreign selling has been stronger than at any other time. On a monthly basis, foreign investors have posted net buying only in January and April. Even then, the amounts were limited to 118.6 billion won and 1.1283 trillion won, respectively.
By contrast, net selling has been massive. After selling 21.0731 trillion won in February and 35.8806 trillion won in March, they sold 44.7146 trillion won in May and 48.6248 trillion won in June, setting a new monthly record for foreign net selling. Last month, they sold another 9.8986 trillion won.
Brokerage analysts say foreign flows will be a key variable, as the domestic stock market has seen sentiment deteriorate sharply despite upbeat earnings forecasts.
Kim Jae-seung, a researcher at Hyundai Motor Securities, said, "The factor that will determine the direction of the domestic stock market in the second half is foreign net buying." He added, "Global oil prices have fallen, easing inflationary pressure, and weaker U.S. employment data have reduced concerns over Federal Reserve rate hikes, which is positive for foreign net buying."
Lee Kyung-min, a researcher at Daishin Securities, also said, "Since foreign investors currently hold the key to market flows, we need to pay close attention to changes in foreign demand." He added, "If KOSPI succeeds in stabilizing in the 6,500 to 6,800 range, it could first recover to around 8,500, which is 7 times the forward price-earnings ratio (PER), and then potentially rise further to around 9,700, or 8 times PER."
Analysts say that for KOSPI to turn upward, and for foreign investors to shift back to net buying, semiconductors, the market's leading sector, must recover. Junyeong Kim, a researcher at iM Securities, said, "The longer the index stays at current levels, the more stop-loss and profit-taking orders could flood in on any rebound, so a strong narrative is needed." He added, "An index rebound means a semiconductor rebound. If semiconductors do not recover easily, the market is likely to move into a phase of stock-by-stock trading while the index moves sideways."

[email protected] Seo Min-ji Reporter