The Easy Knowledge Blog

Foreign investors dumped about KRW 4.5 trillion in a single day, pushing the KOSPI below 6,000 intraday before it narrowly closed above the line.

🎧 Post Summary

A single-day drop of more than 5% is rare for the KOSPI. Rather than an ordinary pullback, the move looks like a sudden shake-out of the money that had piled into semiconductor heavyweights. Here is what pushed the index down and what to watch next.

1. Down to 5,911 intraday, closing at 6,035

The KOSPI opened at 6,186.08 and extended its losses, touching 5,911.11 at the low. It trimmed some of the decline late in the session and held the 6,000 line on a closing basis. That is the lowest close since the July 30 low of 5,593.56 this year. After closing at 7,003.74 on October 2, the index has fallen for five straight sessions: 6,941.39 on Oct 6, 6,803.90 on Oct 7, 6,625.93 on Oct 8, 6,384.24 on Oct 12 and 6,035.35 on Oct 13 (Oct 9 was a market holiday).

2. Foreigners net sell KRW 4.5 trillion; individuals and institutions buy the dip

Foreign investors were net sellers of about KRW 4.5 trillion on the main board. Reported figures vary slightly by outlet, from KRW 4.5128 trillion to KRW 4.5259 trillion. Individuals net bought about KRW 2.2 trillion and institutions about KRW 1.7 trillion. The two most heavily sold names by foreigners were SK hynix (KRW 2.3613 trillion) and Samsung Electronics (KRW 1.3595 trillion).

The contrast is even sharper over the last five sessions (Oct 6 to Oct 13). Individuals net bought KRW 7.465 trillion of Samsung Electronics (KRW 4.1397 trillion) and SK hynix (KRW 3.3253 trillion) combined. Over the same period, foreigners net sold KRW 9.8771 trillion in those two stocks alone. The index fell close to 14% in that span, and more than KRW 1 trillion flowed into leveraged ETFs.

3. Samsung Electronics -7.39%, SK hynix -10.09%

Samsung Electronics closed at KRW 232,000 after sliding as far as KRW 228,000 (-8.98%) intraday. SK hynix closed at KRW 1,443,000 and dipped to KRW 1,425,000 (-11.21%) during the session. SK Square (-12.91%), Samsung Electro-Mechanics (-8.34%) and Samsung Electronics preferred shares (-6.69%) also fell sharply. LG Energy Solution (+3.02%) and Samsung Biologics (+0.42%) closed higher.

Short selling was also concentrated in chips. SK hynix ranked first by short-selling value on the KOSPI on October 13, and Samsung Electronics and SK hynix together accounted for KRW 564.7 billion, or 35.9% of total KOSPI short-selling value.

4. Why did it fall so hard? Three headwinds stacked up

• Overseas chip headwinds: A KB Securities analyst said sentiment toward semiconductors weakened after reports on China’s CXMT planning a next-generation memory launch, combined with comments from Broadcom’s CEO about constraints on expanding AI development.
• A supply-demand gap: Samsung Electronics’ buyback for employee stock compensation has ended, and SK hynix’s buyback and cancellation program is nearing completion, weakening the buying from corporate entities that had been supporting prices. A Daishin Securities FICC head cited the shrinking pool of buyers able to absorb foreign selling as a factor weakening downside support.
• Mechanical selling: Non-arbitrage program trading and rebalancing flows from leveraged ETFs were cited as factors that deepened the decline.

It is also worth noting that the drop does not appear to stem from weak chip earnings themselves. It follows days after Samsung Electronics reported a large earnings figure and the index still fell, which suggests the market is reacting more to supply-demand and industry-outlook concerns than to earnings.

5. What would it take to rebound?

Some in the market argue that valuations, now lower after the sell-off, could provide a floor. However, conditions cited for a rebound include domestic money emerging to absorb foreign selling and confirmation of the semiconductor industry outlook. Rather than committing to one direction, it makes sense to keep both views in mind.

Investor Notes

• Concentration risk: With individual investors heavily buying Samsung Electronics and SK hynix, further declines could magnify losses. Consider reviewing your exposure to single stocks and leveraged products.
• High-volatility zone: Daily swings of around 5% and a sidecar trigger signal very high volatility. Leveraged and inverse products can swing sharply with daily moves, so caution is warranted.
• Dip-buying with care: Some see lower valuations as attractive, while others note that further adjustment remains possible until the supply-demand gap is resolved.
• For information only: This post does not recommend buying or selling any security. Investment decisions and responsibility rest with the investor.

In short, the October 13 plunge was the result of overseas chip headwinds, a supply-demand gap after buybacks ended, heavy foreign selling and mechanical flows all hitting at once. For now, the direction of foreign flows and confirmation of the chip industry outlook are likely to be the key variables.

References

• Seoul Shinmun – KOSPI closes at 6,035.35 as heavy foreign selling drives a 5.46% plunge (seoul.co.kr)
• Seoul Shinmun – [Photo] KOSPI barely holds 6,000 (seoul.co.kr)
• Financial News – Foreigners dump KRW 10 trillion of Samsung and SK hynix as individuals buy over KRW 7 trillion (fnnews.com)
• Money Today – ‘Black Tuesday’ for the KOSPI as foreigners pack up (mt.co.kr)
• Korea Duty Free News – KOSPI plunges 5.46% to 6,035.35 as a supply-demand gap overshadows strong chip earnings (kdfnews.com)
• Sisa Journal – KOSPI plunges 5.46% on KRW 4.5 trillion foreign selling, barely holds 6,000 (sisajournal.com)
• Seoul Economic Daily – KOSPI closes at 6,035 after KRW 4.5 trillion foreign selling (sedaily.com)
• Topstar News – [Short-Selling Briefing] Oct 13: foreigners at 78%, KRW 564.7 billion concentrated in Samsung and SK hynix (topstarnews.net)