Foreign investors are returning to South Korea’s stock market, marking a significant shift after months of net selling.
From March 17 to 21, they recorded five consecutive days of net purchases, totaling approximately 2.773 trillion Korean won (around $1.89 billion). They began targeting large-cap stocks, especially those in the semiconductor and defense sectors.
This marks the largest net buying spree this year, with daily purchases of about $422 million on the 17th, $300 million on the 18th, $204.5 million on the 19th, $375 million on the 20th, and $579 million on the 21st.
Since August last year, foreign investors had been unloading S. Korean stocks for seven consecutive months, as a bleak macroeconomic outlook—marked by slowing growth—weighed on sentiment. Adding to the pessimism, Samsung Electronics, the country’s flagship company, lost its luster as it struggled to keep up in the race for artificial intelligence.
The mood darkened further in November, when former U.S. President Donald Trump was elected, fueling concerns that export-reliant S. Korea could face direct blows from new trade restrictions. From August through the end of February, foreign investors posted net sales totaling $18.7 billion.
However recently, the mood has started to shift. A five-day streak of net buying hasn’t happened since early January (Jan. 3–9), and the scale of the purchases is also notable. The net buying volume on Mar. 21 alone marked the largest single-day figure since mid-August last year.
Foreign investors’ recent investment portfolios have included the top two semiconductor stocks—Samsung Electronics ($1.3 billion) and SK Hynix ($273.3 million)—along with major defense names such as Hanwha Aerospace ($229.4 million), HD Hyundai Heavy Industries ($37.8 million), Hanwha Ocean ($31 million), and HD Korea Shipbuilding & Offshore Engineering ($27.5 million). Auto stocks have also drawn attention, including Hyundai Motor ($101.6 million), Hyundai Mobis ($55.3 million), and Kia ($38.3 million).
Han Ji-young, an analyst from Kiwoom Securities, said, “It’s worth noting that for the first time since early August last year, both foreign and institutional investors posted net buying together.” She added that the rotation among key industries like semiconductors, defense, and shipbuilding would likely continue for a while.
Still, it’s unclear whether the recent wave of foreign buying will continue. With monetary easing gaining pace in Europe and China ramping up its tech ambitions, global investors have no shortage of attractive alternatives.
Stock indexes across Greater China and Europe have seen sharp gains this year: Hong Kong’s Hang Seng is up 17%, Austria’s ASX 17.3%, Germany’s DAX 14.8%, Italy’s FTSEMIB 14.0%, and France’s CAC 40 8.7%. S. Korea’s KOSPI has also climbed more than 9% since the beginning of the year, though the rally has been driven largely by institutional investors such as pension funds, while individuals and foreigners remained net sellers.
As global capital flows into Europe and China, some market watchers remain doubtful that S. Korea will draw strong interest from foreign investors. On Mar. 25, foreigners returned to light net selling in the KOSPI, halting their recent buying streak.
“There’s still political uncertainty, and we don’t yet know what the U.S. will do on tariffs,” said a representative from a foreign asset management firm. “Right now, it’s too soon to feel confident about putting more money into the Korean market.”
Still, many expect that the resumption of short selling at the end of this month could help draw foreign investors back.
Since November 2023, S. Korea has enforced the longest short-selling ban in its history, limiting strategies favored by foreign investors—such as long-short trades, which involve buying expected gainers while shorting expected losers, and pair trading, where two related stocks are traded in opposite directions.
With those strategies restricted, many investors had little choice but to stay away from the Korean market. But with the ban set to be lifted, some believe the conditions are finally aligning for at least a partial return.
Before the COVID-19 pandemic, foreign investors held nearly 40% of South Korean equities. That share has since dropped to around 31% during the prolonged ban on short selling.
