Seoul, Aug 3 (NationPress) Foreign investors achieved their highest net acquisitions on South Korea's benchmark index in 17 months last month, according to data released on Sunday. However, analysts caution about a potential market correction due to the increasing influence of U.S. President Donald Trump's extensive tariff strategy and a robust U.S. dollar.

Offshore investors net acquired 6.28 trillion won (approximately US$4.52 billion) in stocks on the Korea Composite Stock Price Index (KOSPI) during July, marking the most significant monthly net buying since February 2023, when the figure reached 7.858 trillion won, as reported by the Korea Exchange (KRX).

This July amount was also 2.3 times larger than June's net buying of 2.69 trillion won, as per Yonhap news agency.

Foreign investors had transitioned to net selling in August 2024, continuing this trend for nine consecutive months until April.

However, in May, they returned to net buying with approximately 1 trillion won in acquisitions and have sustained this net buying position for three consecutive months through July.

The rise in foreign investment is largely attributed to optimism surrounding the new Lee Jae Myung government's stock market stimulus initiatives and expectations for a tariff agreement between South Korea and the United States.

Additionally, investors reacted positively to the announcement that leading company Samsung Electronics had secured a substantial supply contract with Tesla.

"From the perspective of foreign investors, renewed optimism about stronger performances from Samsung Electronics shapes their outlook on the overall Korean stock market," stated Lee Kyung-min, a researcher at Daishin Securities.

Samsung Electronics emerged as the most purchased stock by foreign investors in July, with net acquisitions amounting to 3.49 trillion won, representing 56 percent of total foreign net buying on the KOSPI.

Major shipbuilder Hanwha Ocean was the second most sought-after stock among foreigners, with net buying totaling 858 billion won, fueled by expectations for enhanced collaboration with the U.S.

Propelled by the strong foreign purchases, the KOSPI climbed 5.7 percent last month.

Nevertheless, analysts predict that the domestic stock market may face a correction in August as the effects of U.S. tariffs become increasingly evident and the U.S. dollar is anticipated to strengthen further.

"With earnings momentum lacking in the domestic market, a short-term market correction appears unavoidable. We expect heightened volatility this month," noted Kim Jun-woo, a researcher at Kyobo Securities, forecasting the KOSPI to oscillate between 2,900 points on the downside and 3,300 points on the upside.

The local currency recently depreciated to near the 1,400-won mark against the dollar, with experts predicting the greenback to remain strong moving forward.

On Friday, the KOSPI fell 3.88 percent to close at 3,119.41, marking the largest daily drop since April 7, as investor sentiment was dampened by the government's tax revision proposal aimed at increasing taxes on corporations and stock investors.

The local currency was quoted at 1,401.4 won against the dollar at 3:30 p.m. Friday, down 14.4 won from the previous session, representing the lowest won-dollar rate since May 14.