Foreign Selling of South Korean Stocks Exceeds $62 Billion
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Newsfilter
- Intensified Foreign Selling: As of late May, foreign investors have offloaded approximately $62 billion worth of South Korean stocks, despite the Kospi's strong performance globally, indicating that the selling is more related to market success than deteriorating fundamentals.
- Structural Market Pressures: The rapid rise of the Korean stock market has significantly increased foreign investors' weightings in global and emerging market benchmarks, forcing many active fund managers to trim their positions to adhere to portfolio and risk limits.
- Domestic Investor Inflows: Despite ongoing foreign selling, a wave of domestic buying has compensated for the outflows, with retail inflows estimated at $70 billion this year, demonstrating the market's resilience.
- Optimistic Future Outlook: Goldman Sachs has raised its 12-month Kospi target to 12,000, forecasting a further 37% upside, indicating that despite the selling pressure, the fundamentals of the Korean equity market remain robust.
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About NMR
Nomura Holdings Inc is a Japan-based company mainly engaged in the securities, investment, and other financial services business across the world. The Company has three business segments. The Sales segment provides investment consultation services to individual clients in Japan. The Investment Management segment provides investment management services and investment solutions, including the establishment and management of investment trusts, discretionary investment services for domestic and foreign investors, fund management and administration for investment corporations and institutional investors, and silent partnership management. The Wholesale segment is engaged in the sale and trading of bonds, equity securities, derivatives, and foreign exchange, as well as investment banking services such as the bonds and securities underwriting business, merger and acquisition (M&A) business and financial advisory services. The Company operates in Japan, the Americas, Europe, Asia and Oceania.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Foreign Investors Dump $801 Million in South Korean Stocks Amid Record Kospi Gains
- Foreign Selling Pressure: As of Monday, foreign investors had unloaded a net 1.24 trillion won (approximately $801 million) worth of Kospi-listed shares, indicating ongoing outflows despite the Kospi's strong performance this year.
- Structural Market Dynamics: Analysts from Goldman Sachs noted that the selling was primarily driven by outflows from the Kospi Tech and Auto sectors, reflecting forced selling due to the market's success, as foreign investors adjust their portfolios.
- Domestic Investor Resilience: Despite the foreign selling, domestic investors have countered this trend with an estimated $70 billion in retail inflows, demonstrating strong confidence in the Korean stock market.
- Robust Fundamentals: Market veterans maintain that the fundamentals of Korean equities remain solid, with Goldman Sachs raising its 12-month Kospi target to 12,000, suggesting a potential upside of 37% in the near future.
See More
Foreign Selling of South Korean Stocks Exceeds $62 Billion
- Intensified Foreign Selling: As of late May, foreign investors have offloaded approximately $62 billion worth of South Korean stocks, despite the Kospi's strong performance globally, indicating that the selling is more related to market success than deteriorating fundamentals.
- Structural Market Pressures: The rapid rise of the Korean stock market has significantly increased foreign investors' weightings in global and emerging market benchmarks, forcing many active fund managers to trim their positions to adhere to portfolio and risk limits.
- Domestic Investor Inflows: Despite ongoing foreign selling, a wave of domestic buying has compensated for the outflows, with retail inflows estimated at $70 billion this year, demonstrating the market's resilience.
- Optimistic Future Outlook: Goldman Sachs has raised its 12-month Kospi target to 12,000, forecasting a further 37% upside, indicating that despite the selling pressure, the fundamentals of the Korean equity market remain robust.
See More
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- Energy Price Impact: Energy prices decreased by 3.9% in April, a smaller decline than March's 5.7%, reflecting ongoing impacts from the Iran war, which could lead to a rebound in inflation in the coming months.
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- Fiscal Policy Response: The Japanese government is considering a supplementary budget of 3 trillion yen to address rising energy costs, demonstrating an intention to adopt proactive fiscal measures in the face of inflationary pressures.
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- Energy Cost Pressures: Despite the decline in inflation, consumer prices are expected to continue rising due to increased energy costs stemming from the Iran conflict, posing challenges to economic recovery, especially against a backdrop of a weakening labor market.
- Central Bank Policy Focus: The Bank of England is closely monitoring price increases and their impact on wages and business costs, with market expectations leaning towards a 25 basis point rate hike in July, raising the Bank Rate to 4% to combat potential inflationary pressures.
- Weak Economic Growth: Although inflation has eased, sluggish economic growth and an unemployment rate rising to 5% may limit the central bank's ability to raise rates, with economists predicting that the Bank may opt to hold rates steady at the June policy meeting to avoid further strain on the fragile economy.
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- Clear Stance on Taiwan: Xi warned Trump that the Taiwan issue could pose a significant threat to U.S.-China relations, while Trump urged both sides to cool tensions, reflecting a clearer stance on Taiwan policy that may help maintain stability in bilateral relations.
- Long-term Tech Strategy: China's long-term strategy in technology is becoming increasingly evident; although Trump mentioned that China chose not to purchase Nvidia H200 chips, this indicates China's reluctance to rely on a U.S.-regulated system, thereby protecting its own AI chipmakers' interests, which could affect future tech cooperation.
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- EV Business Restructuring: The automaker plans to cancel the launch and development of certain EV models in North America, with restructuring costs expected to exceed $9 billion, a strategic move to tackle fierce competition from emerging Chinese EV manufacturers.
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See More
Foreign Investors Dump $801 Million in South Korean Stocks Amid Record Kospi Gains
- Foreign Selling Pressure: As of Monday, foreign investors had unloaded a net 1.24 trillion won (approximately $801 million) worth of Kospi-listed shares, indicating ongoing outflows despite the Kospi's strong performance this year.
- Structural Market Dynamics: Analysts from Goldman Sachs noted that the selling was primarily driven by outflows from the Kospi Tech and Auto sectors, reflecting forced selling due to the market's success, as foreign investors adjust their portfolios.
- Domestic Investor Resilience: Despite the foreign selling, domestic investors have countered this trend with an estimated $70 billion in retail inflows, demonstrating strong confidence in the Korean stock market.
- Robust Fundamentals: Market veterans maintain that the fundamentals of Korean equities remain solid, with Goldman Sachs raising its 12-month Kospi target to 12,000, suggesting a potential upside of 37% in the near future.
See More
Foreign Selling of South Korean Stocks Exceeds $62 Billion
- Intensified Foreign Selling: As of late May, foreign investors have offloaded approximately $62 billion worth of South Korean stocks, despite the Kospi's strong performance globally, indicating that the selling is more related to market success than deteriorating fundamentals.
- Structural Market Pressures: The rapid rise of the Korean stock market has significantly increased foreign investors' weightings in global and emerging market benchmarks, forcing many active fund managers to trim their positions to adhere to portfolio and risk limits.
- Domestic Investor Inflows: Despite ongoing foreign selling, a wave of domestic buying has compensated for the outflows, with retail inflows estimated at $70 billion this year, demonstrating the market's resilience.
- Optimistic Future Outlook: Goldman Sachs has raised its 12-month Kospi target to 12,000, forecasting a further 37% upside, indicating that despite the selling pressure, the fundamentals of the Korean equity market remain robust.
See More
Japan's Core Inflation Drops to Lowest Level Since 2022
- Core Inflation Decline: Japan's core inflation rate fell to 1.4% in April, below the expected 1.7%, potentially weakening the case for an early rate hike by the Bank of Japan, indicating economic recovery fragility.
- Energy Price Impact: Energy prices decreased by 3.9% in April, a smaller decline than March's 5.7%, reflecting ongoing impacts from the Iran war, which could lead to a rebound in inflation in the coming months.
- Economic Growth Performance: Japan's annualized growth rate for Q1 2026 reached 2.1%, exceeding expectations, with strong export performance potentially providing the Bank of Japan with confidence to raise rates, despite inflation remaining below target.
- Fiscal Policy Response: The Japanese government is considering a supplementary budget of 3 trillion yen to address rising energy costs, demonstrating an intention to adopt proactive fiscal measures in the face of inflationary pressures.
See More
UK Inflation Eases to 2.8% in April Amid Energy Price Cap
- Inflation Data Decline: The UK's inflation rate fell to 2.8% in April from 3.3% in March, primarily due to the energy price cap implemented on April 1, indicating the initial effectiveness of government support measures.
- Energy Cost Pressures: Despite the decline in inflation, consumer prices are expected to continue rising due to increased energy costs stemming from the Iran conflict, posing challenges to economic recovery, especially against a backdrop of a weakening labor market.
- Central Bank Policy Focus: The Bank of England is closely monitoring price increases and their impact on wages and business costs, with market expectations leaning towards a 25 basis point rate hike in July, raising the Bank Rate to 4% to combat potential inflationary pressures.
- Weak Economic Growth: Although inflation has eased, sluggish economic growth and an unemployment rate rising to 5% may limit the central bank's ability to raise rates, with economists predicting that the Bank may opt to hold rates steady at the June policy meeting to avoid further strain on the fragile economy.
See More
Trump-Xi Meeting Signals Business Optimism
- Strategic Stability Framework: The Trump-Xi meeting resulted in a consensus on 'constructive strategic stability,' indicating both sides will resolve trade disputes through dialogue, thereby enhancing business confidence and reducing uncertainty, which is expected to positively impact the business environment over the next three years.
- Clear Stance on Taiwan: Xi warned Trump that the Taiwan issue could pose a significant threat to U.S.-China relations, while Trump urged both sides to cool tensions, reflecting a clearer stance on Taiwan policy that may help maintain stability in bilateral relations.
- Long-term Tech Strategy: China's long-term strategy in technology is becoming increasingly evident; although Trump mentioned that China chose not to purchase Nvidia H200 chips, this indicates China's reluctance to rely on a U.S.-regulated system, thereby protecting its own AI chipmakers' interests, which could affect future tech cooperation.
- Weak Economic Data: China's April retail sales growth was only 0.2%, the lowest since 2022, and fixed asset investment declined due to real estate drag, signaling economic slowdown that may influence the context and urgency of U.S.-China trade negotiations.
See More
Honda Motor Faces First Operating Loss in Nearly 70 Years
- Operating Loss Overview: Honda Motor reported an operating loss of 414.3 billion yen ($2.61 billion) for the fiscal year ending in March, a stark contrast to the previous year's profit of 1.2 trillion yen, highlighting severe impacts from its struggling EV business and competitive pressures.
- EV Business Restructuring: The automaker plans to cancel the launch and development of certain EV models in North America, with restructuring costs expected to exceed $9 billion, a strategic move to tackle fierce competition from emerging Chinese EV manufacturers.
- Market Reaction Analysis: Despite the losses, Honda's stock surged over 7%, primarily driven by the company's guidance for operating and net profit, which exceeded market expectations by 38%, indicating investor confidence in its recovery potential.
- Strategic Shift Focus: Honda is shifting its focus towards the Chinese and Indian markets, planning to leverage its strengths in the motorcycle business to capture demand in India's low-cost segment, in response to the evolving global EV landscape.
See More
