Why Did KOSPI Face a Historic Foreign Sell-Off in Early November?
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Synopsis
In an unprecedented move, South Korea's KOSPI index witnessed its most significant foreign sell-off during the first week of November. This article explores the reasons behind this market retreat, focusing on profit-taking and concerns over an AI bubble that shook investor confidence.
Key Takeaways
- South Korea's KOSPI index faced a historic foreign sell-off of 7.26 trillion won.
- Profit-taking and AI bubble concerns contributed to market volatility.
- Samsung and SK hynix were major contributors to foreign sell-offs.
- The Korean won's depreciation may further impact foreign investment.
- Experts suggest a consolidation phase for the market ahead.
Seoul, Nov 9 (NationPress) In a striking turn of events, South Korea's primary stock index marked its largest-ever weekly sell-off by foreign investors during the first week of November. This dramatic shift was driven by profit-taking and rising concerns over a potential artificial intelligence (AI) stock bubble, as reported by the Korea Exchange on Sunday.
Between Monday and Friday, foreign investors offloaded a net total of 7.26 trillion won (approximately US$4.98 billion) in shares on the benchmark Korea Composite Stock Price Index (KOSPI), according to the bourse operator, as cited by the Yonhap news agency.
This figure stands as the highest weekly sell-off recorded by foreign investors in the KOSPI's history, eclipsing the previous record of 7.05 trillion won set during the second week of August 2021.
The KOSPI faced significant fluctuations last week, reaching a record high above 4,200 on Monday before dropping nearly 3 percent on Wednesday. After a brief recovery on Thursday, the index fell 1.81 percent on Friday, concluding just below the 4,000 mark.
As of October 27, the benchmark had been the fastest-growing major stock index among Group of 20 nations, buoyed by robust foreign inflows into semiconductors and other blue-chip stocks, according to data from Yonhap Infomax, the financial division of Yonhap News Agency.
However, this rally incited profit-taking among foreign investors, particularly following Wall Street's downturn last week amid renewed apprehensions regarding an AI bubble, analysts pointed out.
Notably, Samsung Electronics Co., the world's leading memory chip manufacturer, along with its competitor SK hynix Inc., accounted for over 70 percent of the foreign sell-offs last week.
Data indicated that foreign investors sold 1.5 trillion won worth of Samsung shares and 3.7 trillion won in SK shares.
Chung Hae-chang, an analyst at Daishin Securities, commented, "With the U.S. federal government shutdown becoming the longest in history, uncertainty regarding its economic repercussions has intensified. In light of the absence of upward momentum and investor confidence, the market is expected to remain in a consolidation phase for the foreseeable future."
Furthermore, Lee Sung-hoon, an analyst at Kiwoom Securities, emphasized that the recent depreciation of the Korean won will diminish foreign investors' interest, suggesting that foreign inflows are unlikely to recover soon.
The local currency dipped below the psychologically significant 1,450 won threshold on Friday, reaching its lowest point in nearly seven months.
Point of View
This unprecedented sell-off underscores the volatility present in today's markets, especially amid broader economic uncertainties. While profit-taking is a natural market response, the heightened concerns over AI investments highlight a critical need for investor caution. As we navigate these turbulent waters, it's essential to remain informed and prepared for potential shifts in market dynamics.
NationPress
10/11/2025
Frequently Asked Questions
What caused the KOSPI's foreign sell-off?
The KOSPI's foreign sell-off was primarily driven by profit-taking and concerns over a potential AI stock bubble, prompting investors to retreat.
How much did foreign investors sell during the first week of November?
Foreign investors sold a net total of 7.26 trillion won, equivalent to approximately US$4.98 billion.
What companies were most affected by the sell-off?
Samsung Electronics and SK hynix were significantly impacted, accounting for over 70 percent of the foreign sell-offs.
What is the current state of the KOSPI index?
The KOSPI index has experienced significant volatility, dropping below the 4,000 mark after reaching a high above 4,200.
How does the recent weakness of the Korean won affect investors?
The depreciation of the Korean won is likely to deter foreign investors due to increased currency risk, impacting foreign inflows.
